AM Best Affirms Credit Ratings of Scotia Reinsurance Limited
June 21 2024 - 1:57PM
Business Wire
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.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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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