AM Best Affirms Credit Ratings of RBC Life Insurance Company

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of RBC Life Insurance Company (RBC Life) (Mississauga, Ontario). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect RBC Life’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.

RBC Life is owned ultimately by Royal Bank of Canada (RBC), the largest bank in Canada, as measured by market capitalization. Although RBC Life benefits from its relationship to RBC, the ratings of RBC Life currently do not receive any explicit notching for lift. The parent bank is a strong organization with approximately CAD 118 billion of IFRS equity at financial year-end 2023 and CAD 2 trillion in assets. The group earned approximately CAD 14.9 billion in net income on CAD 56 billion in revenue in fiscal-year 2023. AM Best notes that given the parent’s prior record of capital support, RBC may provide additional capital should RBC Life ever need capital to maintain its risk-adjusted capitalization level. RBC has demonstrated this support through cash infusions in the form of issued share capital of approximately CAD 75 million in 2011; CAD 85 million in 2012 and 2015; CAD 50 million in 2018; and CAD 470 million in 2022.

In the past five years, RBC Life adjusted its capital management strategy by limiting dividends upstreamed to its parent companies to enhance its level of available capital in anticipation of its transition to IFRS 17 and to maintain its risk-adjusted capitalization, as measured on a Life Insurance Capital Adequacy Test (LICAT) basis. In addition, RBC contributed CAD 45 million of cash to RBC Life in the fourth quarter of fiscal-year 2023.

The stable outlooks capture RBC Life’s very strong overall balance sheet strength assessment, supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and strong operating performance. Over the next few quarters, AM Best will monitor the impacts of IFRS 17 on RBC Life’s ratings, and in particular, its asset-liability management, investment performance, new business strategies and the associated capital strain in a competitive life and disability insurance market.

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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