AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) for BMO Life Assurance Company (BMOLAC). The outlook for both ratings remains stable.
The ratings reflect BMOLAC’s strong balance sheet, assessed by AM Best as very strong, alongside its strong operating performance, neutral business profile, and appropriate enterprise risk management.
BMOLAC provides a range of insurance products, including term life, whole life, universal life, critical illness insurance, structured settlements, and annuities. The company recently completed its first international pension risk transfer transaction, which adds to its revenue diversification.
BMOLAC distributes its products through a network of sales agents across Canada and through direct-to-consumer channels. The company, headquartered in Toronto, is a subsidiary of the Bank of Montreal.
The company’s risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is further supported by its favourable Life Insurance Capital Adequacy Test (LICAT) ratio. Strong long-term operating results have contributed to BMOLAC’s risk-adjusted capitalization.
AM Best highlighted steady earnings growth and premium levels, along with the company’s solid market positions in various product segments, including segregated funds, structured settlements, pension buyouts, and life insurance.
Over the past three years, BMOLAC has not paid significant dividends to its parent company but plans to resume dividends while maintaining its target risk-adjusted capital levels, AM Best said.
Meanwhile, challenges for BMOLAC include competition from larger insurers in Canada’s mature and concentrated market and managing a business portfolio with long-duration policies and increased longevity risk exposure. AM Best also noted that BMOLAC has addressed these challenges by increasing its market share across product lines and implementing diverse asset duration strategies.
BMOLAC’s ability to sustain its strong financial position and adapt to market conditions supports its affirmed ratings and stable outlook.
