In the wake of last week's announcement that the Dutch multinational Aegon had sold its Canadian operations to US insurer Wilton Re, the A. M. Best ratings agency has placed the Canadian insurers under review.
On October 17, A. M. Best placed Transamerica Life Canada (TLC) and the Canadian Premier Life Insurance Company (CPL) “under review with developing implications”. A. M. Best has given Transamerica a financial strength rating of A-, and an issuer credit rating of “a-”, while its Canadian Premier Life subsidiary held a financial strength rating of A and an issuer credit rating of “a”.
“The ratings of TLC and CPL currently reflect the ratings enhancement derived from the overall creditworthiness and historical financial support received from Aegon,” explains the ratings agency. “The under review status reflects A.M. Best’s belief that the companies will be able to continue their current strategy of marketing life insurance, savings and retirement products to the Canadian middle market with the support of its new parent company. A.M. Best notes that the transaction is being funded through cash contributions by Wilton Re’s ultimate parent, the Canada Pension Plan Investment Board.”
A. M. Best says the ratings will remain under review until the transaction is completed in early 2015, at which time it will reassess the insurers’ position. If A.M. should then determine that Transamerica and Canadian Premier “are not viewed as strategically important to Wilton Re”, it warns that their ratings will be negatively affected.