OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a+” of TD Reinsurance (Barbados) Inc. (TD Re) (Barbados). The outlook for both ratings is stable.

TD Re is a life reinsurer that is ultimately owned by The Toronto-Dominion Bank (TD Bank) (Toronto, Ontario). TD Re principally reinsures credit insurance policies underwritten by third-party life insurance carriers on consumer loans originated by its Canadian retail bank branches. Subsequently, TD Re retrocedes those Canadian risks to several unaffiliated reinsurers and accepts non-Canadian risks of a similar nature from those unaffiliated reinsurers.

The rating affirmations reflect TD Re’s continuing pattern of strong profitability, solid capitalization, strong liquidity and conservative investment portfolio. Additionally, the ratings recognize the high credit quality of TD Re’s investment portfolio, which provides good liquidity and is invested primarily in AAA-rated securities of short duration that match its liability profile.

These strengths are partially offset by historically high shareholder dividend payouts and dependence upon consumer loan originations for growth. While overall operating fundamentals of TD Re and TD Bank remain strong, a potential decrease in consumer loan originations in Canada could impact TD Bank’s ability to sell credit insurance. Additionally, a further decline in economic conditions in Europe could impact TD Re’s ability to retrocede assumed risks to its European counterparties.

TD Re is considered well positioned at its current rating level. Positive rating actions are unlikely in the near or intermediate term. Factors that may cause negative rating actions include significant adverse changes in TD Re’s capitalization, operating performance or business model.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Anthony McSwieney, 908-439-2200, ext. 5715
Senior Financial Analyst
anthony.mcswieney@ambest.com
or
Rosemarie Mirabella, CPA, CFA, 908-439-2200, ext.5892
Managing Senior Financial Analyst
rosemarie.mirabella@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Co.