Best’s News & Research Service - October 25, 2019 09:11 AM (EDT)
AM Best Affirms Credit Ratings of BMO Life Assurance Company
- October 25, 2019 09:11 AM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of BMO Life Assurance Company (BMOLAC) (Toronto, Canada). The outlook of these Credit Ratings (ratings) is stable. BMOLAC is ultimately owned by the Bank of Montreal (BMO).
The ratings reflect BMOLAC’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. BMOLAC underwrites a full suite of individual insurance products, including term life, whole life, universal life, critical illness, structured settlements and annuities. Moreover, the company has a growing book of pension risk transfer business, which offers additional risk diversification. The company distributes its products through a large network of sales agents across Canada, as well as through direct-to-consumer channels.
BMOLAC improved its risk-adjusted capitalization level from the previous year and was assessed as “strongest,” as measured by Best’s Capital Adequacy Ratio (BCAR), which was demonstrated further by a favorable and increasing Life Insurance Capital Adequacy Test (LICAT) ratio. The company also has produced strong operating results over the longer term, achieving a 5-year average return on equity of more than 13%, despite substantial premium growth in recent years driven by structured settlements and pension buy-outs.
Partially offsetting these positive rating factors is the continued competition BMOLAC faces from larger insurance organizations to increase its market share in Canada’s mature and concentrated marketplace. Asset-liability matching on BMOLAC’s long-duration book of business in a low interest rate environment remains a challenge.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with an exclusive focus on the insurance industry.