AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of BMO Life Assurance Company (BMOLAC) (Toronto, Canada). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect BMOLAC’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.
BMOLAC underwrites a full suite of insurance products, including term life, whole life, universal life, critical illness, structured settlements and annuities. The company distributes its products through a large network of sales agents across Canada, and through direct-to-consumer channels.
BMOLAC has maintained a favorable risk-adjusted capitalization level over the long term. AM Best currently assesses the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as very strong. It is noted that BMOLAC’s capitalization in recent years has been managed by dividend payments that have included $200 million in 2020. The company has performed well throughout the COVID-19 pandemic despite some modest decline in premiums and earnings during 2020, which have seen a substantial positive bounce back through July 2021. The company has achieved favorable results over the long term, with a five-year average return on equity of nearly 13%.
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 also remains a challenge. AM Best notes, however, that these challenges have been managed by the company with success over the long term.
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 Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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