AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Scotia Reinsurance Limited (Scotia Re) (Barbados). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Scotia Re’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. The ratings also reflect implicit support from the greater organization.

Scotia Re is owned ultimately by The Bank of Nova Scotia (Scotiabank), which is among the leading banks in Canada, as measured by market capitalization. The parent bank is a strong organization with approximately CAD 79 billion of total equity at fiscal year-end October 2023 and CAD 1.4 trillion in assets. In addition, the bank earned approximately CAD 7.5 billion in net income on CAD 32 billion in revenue in fiscal-year 2023. In fiscal-year 2024, AM Best notes that Scotia Re may for a few quarters pause the dividends upstreamed to its parent company, to enhance its level of available capital and maintain its risk-adjusted capitalization after transitioning to IFRS-17 during the year, which AM Best views as favorable risk management given Scotia Re’s business profile that focuses on moderately riskier international markets. AM Best notes that Scotiabank does not guarantee support but may at its discretion provide additional capital should Scotia Re need support to maintain its robust risk-adjusted capitalization assessed at the level of strongest, as measured by Best’s Capital Adequacy Ratio (BCAR).

The stable outlooks reflect Scotia Re's very strong balance sheet strength assessment supported by strong operating performance and implicit support from the ultimate parent. The company’s favorable operating return on equity on a longstanding basis provides significant support to the balance sheet and reflects Scotia Re’s appropriate underwriting practices in its core creditor life reinsurance businesses originated in Mexico and various countries in South and Central America and the Caribbean.

These strengths are offset partially by Scotia Re’s net premiums earned being highly dependent on the growth strategies of Scotiabank and the economies of these international markets, many of which are deemed to have higher country risk profiles. Scotia Re’s premiums continued to decline in 2023 following the company’s strategic decision to exit certain products in Mexico, Peru and the Caribbean in line with its disciplined risk appetite and profitability targets, which is a trend that will continue to be monitored by AM Best.

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.

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Stratos Laskarides Senior Financial Analyst +1 908 882 1995 stratos.laskarides@ambest.com

Christopher Sharkey Associate Director, Public Relations +1 908 882 2310 christopher.sharkey@ambest.com

Edward Kohlberg Director +1 908 882 1979 edward.kohlberg@ambest.com

Al Slavin Senior Public Relations Specialist +1 908 882 2318 al.slavin@ambest.com