A.M. Best Co. has affirmed the financial strength rating and issuer credit ratings of the life/health companies under RBC Insurance Group, the rating agency said Tuesday.

The firm said that the ratings for its Canadian life insurance subsidiary, RBC Life Insurance Co., “reflect its strong risk-adjusted capitalization, generally increasing premium trends, as well as the overall strength and stability of RBC Insurance”. It notes that RBC Life “maintains a significant market position in the individual living benefits and group long-term disability insurance markets”, and that it has recently focused on growing its individual life segments, primarily through the sale of universal and term life insurance.

“Partially offsetting these positive rating factors are the challenges RBC Life faces while trying to obtain greater market share in the Canadian individual life arena, as well as fluctuating earnings in the group and individual accident and sickness markets. This volatility is due to the strengthening of morbidity assumptions and cyclical claims experience,” it says. Also, it notes that RBC Life only has a modest position in the wealth management market, and has recorded inconsistent results in its individual life line over the last several years.

Additionally, it notes that the ratings for its U.S. life insurance entity, Liberty Life Insurance Co., “recognize its good capitalization, profitable operating results and ultimate ownership by RBC Insurance.”

“Partially offsetting these positive rating factors is Liberty Life’s modest business profile, as evidenced by declining net premiums from the in-force block of life business, interest rate risk and high exposure to real estate linked assets. Prior to 2009, limited growth trends had limited the cost benefits of scale,” it says.

The outlook for all ratings is stable.

IE