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Best’s News & Research Service - April 01, 2022 02:44 PM (EDT)

AM Best Affirms Credit Ratings of RBC Life Insurance Company

  • April 01, 2022 02:44 PM (EDT)
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Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” (Excellent) of RBC Life Insurance Company (RBC Life) (Mississauga, Ontario). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect RBC Life’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

RBC Life continues to produce favorable operating results in its core individual life business segment, despite the implications of a global pandemic environment, with added profitability from its group life, health, and annuity lines. These positive operating results have been maintained over the long term, which has contributed to the growth of an already favorable balance sheet.

RBC Life operates as the Canadian life insurance operation of its ultimate parent, Royal Bank of Canada (RBC) [TSX and NYSE: RY], under RBC Insurance, the brand name for the insurance operating entities of RBC. RBC Life’s earnings in fiscal-year 2021 remained strong despite falling slightly after achieving five consecutive years of record net income in 2020. Previous results were attributed largely to more favorable than projected investment-related gains from a U.S. bond diversification strategy. The company significantly expanded premiums written in its group annuity and wealth lines of business beginning in 2017, further diversifying its overall book of business and continuing to have a significant presence in Canada’s pension risk transfer market through 2021. In addition, the company’s risk-adjusted capitalization, measured by Best’s Capital Adequacy Ratio (BCAR), improved to the strongest level beginning in 2019, supported by further substantial growth in absolute capital from retained earnings and has been maintained at such level ever since.

Partially offsetting these positive rating factors are the challenges RBC Life still faces while positioning itself to increase market share in Canada’s competitive insurance environment, which is dominated by several larger organizations. Despite the diverse product portfolio offering universal life, traditional life, individual and group health, wealth and group annuity, RBC Life has still been largely dependent on its individual life insurance business for earnings as other lines continue to fluctuate by year.

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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