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 Scotia Insurance
(Barbados) Limited (Scotia Re) (Barbados). The outlook for both
ratings is stable.
Scotia Re is primarily a life reinsurer that is ultimately owned by
The Bank of Nova Scotia (Scotiabank). Scotia Re principally
reinsures credit insurance policies underwritten by third-party life
insurance carriers on consumer loans originated by Canadian, Latin
American and Caribbean retail branches of Scotiabank. Scotia Re then
retrocedes the Canadian risks to unaffiliated reinsurers and accepts
similar non-Canadian risks from those unaffiliated reinsurers. In
addition, Scotia Re also accepts a moderate level of international
The rating affirmations reflect Scotia Re’s adequate levels of
capitalization and geographically diversified revenue and operating
earnings, which differentiate it somewhat from its peers. Additionally,
the ratings reflect Scotia Re’s enterprise risk management (ERM)
framework, which is well integrated into its ultimate parent’s ERM risk
process, and its highly liquid investment portfolio that consists
primarily of term deposits with a bank affiliate and other North
American financial institutions.
These strengths are partially offset by Scotia Re’s dependence upon
consumer loan originations within Canada, and to a lesser extent, Latin
America and the Caribbean. Premium growth has the potential to decline
if consumer loan originations slow in any of these markets.
Additionally, a further decline in economic conditions in Europe could
impact the company’s ability to retrocede assumed risks to its European
counterparties. Scotia Re is exposed to potential earnings volatility
from its assumed property catastrophic risk, which could impact capital
Scotia 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 the company’s capitalization, operating performance
or business model. Such changes could include a material shift in
business growth within property catastrophic risk exposure relative to
its core credit insurance business.
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
A.M. Best Co.Anthony McSwieneySenior
Financial Analyst908-439-2200, ext. firstname.lastname@example.orgRosemarie
Mirabella, CPA, CFAManaging Senior Financial Analyst908-439-2200,
MorrowSenior Manager, Public Relations908-439-2200,
PeavyAssistant Vice President, Public Relations908-439-2200,
Source: A.M. Best Co.