Scotia Insurance Barbados has had its A-(Excellent) rating affirmed by international insurance rating agency AM Best.
The agency also assigned a ‘stable’ outlook for the locally registered company.
According to the New York-headquartered agency, the rating it assigned to Scotia Insurance reflected the company’s balance sheet strength, “its strong operating performance, neutral business profile and appropriate enterprise risk management”.
Scotia Insurance is mainly involved in life reinsurance and is ultimately owned by The Bank of Nova Scotia (Scotiabank), a Canadian commercial bank.
Scotia Insurance prOvides reinsurers credit insurance policies underwritten by major third-party life insurance carriers on consumer loans that originated with Scotiabank’s retail operations throughout Canada.
AM Best said in a statement: “The company has a long history of favourable underwriting results that have continued through 2020, despite challenges brought on from operating in the COVID-19 pandemic environment.
The company is bolstered further by a favourable riskadjusted capitalisation and an investment portfolio that provides the entity with substantial liquidity due to its short duration.
At the same time, the rating agency cautioned that Scotia Insurance’s strengths were offset by the company’s “dependence on lending product originations within Canada, which were hindered by the COVID-19 pandemic”.
In addition. the agency stressed that slowing of creditor “insurance cross-sell” on loans in recent years, was “expected to further the decline in premium levels in the near term”.
Furthermore, AM Best noted that despite Scotia Insurance’s ability to manage capital to specific internal targets, which has kept absolute capitaliSation levels largely flat, the insurance provider “could recapitalise in a stress scenario by adjusting its shareholder dividend payout”. (IMC1)
