A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to "a+" from "a" and affirmed the Financial Strength Rating (FSR) of A (Excellent) of RBC Life Insurance Company (RBC Life) (Mississauga, Ontario). The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR remains stable.
The ratings reflect RBC Life's balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The rating upgrade reflects significant growth of capital and surplus, support from its ultimate parent, Royal Bank of Canada (RBC), and the continued growth of earnings and premium.
RBC Life operates as the Canadian life insurance operation of its ultimate parent, RBC, under RBC Insurance, a division of RBC. A.M. Best believes RBC will continue to support RBC Life's growth initiatives, if needed, as it has demonstrated in the past. Earnings for fiscal year-end 2017 reached a record high for the second consecutive year due to favorable investment related gains coupled with improved underwriting results. The company has significantly expanded premiums written in its group annuity and wealth lines of business, further diversifying its overall book of business. Equity has been bolstered by these positive earnings and premium trends.
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, dominated by several larger organizations, along with the continuing challenges of operating in a low interest rate environment. A.M. Best also notes that despite a wide range of product offerings in multiple business lines, RBC Life continues to rely on its individual life business to drive earnings as it tries to gain scale in other lines.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases
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