AM Best Withdraws From Review With Negative Implications And Confirms Credit Ratings Of Blue Cross Life Insurance Company Of Canada

OLDWICK, New Jersey– (BUSINESS WIRE) –
AM Best removed the rating under review with negative implications and confirmed the financial strength rating of A- (excellent) and the issuer’s long-term credit rating of “a-” (excellent) of Life Insurance Company Blue Cross of Canada (BCLIC) (Moncton, New Brunswick, Canada). The outlook attributed to credit ratings (ratings) is negative.

The ratings reflect the strength of BCLIC’s balance sheet, which AM Best considers strong, as well as its adequate operational performance, neutral business profile and appropriate management of corporate risks.

The removal of the status under review with negative implications reflects the risk-adjusted capitalization of BCLIC, which was affected by the write-downs on its private loan assets, linked to one of its asset managers, and a higher amount risk fees to support larger blocks of higher sales business. The transfer of a large block of business from CBP Health Insurance Company and a pending transfer of a block of business from Canassurance Hospital Services Association, since everyone became a shareholder and distributor in 2020, also had an impact on BCLIC’s risk-adjusted capitalization. AM Best notes that despite the write-downs taken up to the third quarter of 2021, further write-downs, if necessary, will be manageable and will support an adequate assessment of Best’s capital adequacy ratio (BCAR).

BCLIC was indicted with negative implications on June 10, 2021, after discovering that BCLIC’s asset manager for private loans, Bridging Finance, had been placed in receivership by Canadian regulatory authorities due to fraudulent activity. The assigned negative outlook reflects AM Best’s expectations that further impairments of the private loan portfolio or negative operating performance could lead to a decline in risk-adjusted capitalization, as measured by BCAR. AM Best will continue to monitor risk-adjusted capital trends, which may lead to a review of its overall balance sheet assessment if the loan portfolio is sold for an amount significantly lower than the current carrying amount of BCLIC’s balance sheet. Alternatively, the outlook could be revised to stable if the portfolio is sold at or above current book value and there is an increase in BCAR ratios driven by organic earnings growth. On a qualitative basis, the assessment of BCLIC’s balance sheet is reinforced by its corporate responsibility model, which shares the subscription benefits with its shareholders / distributors.

This press release relates to credit ratings published on the AM Best website. For all rating information relating to the release and relevant 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 more information on the use and limits of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s credit scores, Best’s preliminary credit reports, and AM Best’s press releases, please see Guide to Proper Use of Best Ratings and Reviews.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based at United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico. For more information visit www.ambest.com.

Copyright © 2021 by AM Best Rating Services, Inc. and / or its affiliates. ALL RIGHTS RESERVED.

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Frank Walko
Financial Analyst

+1 908 439 2200, ext. 5072

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Christophe sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

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Rosemarie Mirabella
Director

+1 908 439 2200, ext. 5892

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Jim peavy
Director, Communications

+1 908 439 2200, ext. 5644

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Source: AM Best