A.M. Best Affirms Ratings of Bank of Montreal Insurance (Barbados) Ltd.

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Bank of Montreal Insurance (Barbados) Limited (BOMIBL) (Barbados). The outlook for both ratings is stable.

BOMIBL is a reinsurance company that is ultimately owned by Bank of Montreal (Toronto, Ontario), the fourth-largest full service bank in Canada by assets. BOMIBL principally reinsures credit insurance policies underwritten by third-party life insurance carriers, retrocedes those Canadian risks to several unaffiliated reinsurers and accepts non-Canadian risks of equivalent magnitude from unaffiliated reinsurers. Additionally, BOMIBL participates at a modest exposure level in several property/casualty reinsurance pools, life retrocession pools and other life reinsurance agreements.

The ratings of BOMIBL reflect its consistently solid underwriting performance, favorable risk-adjusted capitalization and ample liquidity. BOMIBL’s financial strength and strong operating trends are founded upon the fundamentals of a conservative business model, a strategy focused upon underwriting profit on its core creditor life business and assuming minimal investment risk. The balance sheet is supported by a portfolio of high quality liquid short-term assets, which are well matched to the company's liability portfolio.

Partially offsetting these strengths are the relatively narrow mix of business and the expected correlation of new business volume with the Canadian economy. The ratings also consider fluctuating gross written premiums over the last few years due to an overall softening of the market. In addition, the concentration in short-term securities has resulted in lower investment income reflecting the continued low interest rate environment.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.