July 21, 2005 by Canadian Underwriter
Royal Bank of Canada Insurance Company Ltd.’s financial strength rating of A (Excellent) and its issuer credit rating of “a+” has recently been affirmed by A.M. Best. Both ratings have a stable outlook.
According to A.M. Best, these ratings reflect RBCI’s success in capitalization, underwriting and operating performance. These ratings also consider the stability and synergies that RBCI receives from its ultimate parent company, Royal Bank of Canada.
"RBCI’s core life retrocession business continues to generate consistently positive results and the company benefits from a broad geographical spread of risk," A.M. Best says, "which compliments a diverse product mix embodied in a book of business that includes retrocession and reinsurance of life, property and trade credit risk business. Furthermore, as a result of conservative operating practices, RBCI has consistently generated above average returns."
However, the report on Royal indicates that challenges in the insurer’s property portfolio, where results have been affected by catastrophic events, are partially offsetting these rating strengths. In addition, the low interest rate environment has affected overall returns from the investment portfolio. In response, Royal is repositioning its property reinsurance portfolio, enhanced by a hardening reinsurance market.