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A.M. Best Affirms Credit Ratings of Industrial Alliance Insurance and Financial Services, Inc. and Its Subsidiaries

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A.M. Best Affirms Credit Ratings of Industrial Alliance Insurance and Financial Services, Inc. and Its Subsidiaries

A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "aa-" of Industrial Alliance Insurance and Financial Services Inc. (IA) (Quebec) [TSX:IAG]. Additionally, A.M. Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of IA. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of "a" of IA's U.S. life insurance subsidiaries: IA American Life Insurance Co., American-Amicable Life Insurance Co. of Texas, Pioneer Security Life Insurance Co., Pioneer American Insurance Co. and Occidental Life Insurance Co. of NC. (These companies are collectively known as the IA American Life Group.) All U.S. companies are domiciled in Waco, TX. A.M. Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of "a+" of Industrial Alliance Pacific General Insurance Corporation (IAPG) (headquartered in Vancouver, Canada). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the Long-Term IRs.)

The ratings reflect IA's balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management. The ratings of IA also reflect its solid absolute and risk-adjusted capitalizations, consistent profitability and continued growth in the retail services and segregated fund businesses. A.M. Best notes that IA has reported favorable capital levels despite the low interest rate environment, and financial leverage that remains at targeted levels and within A.M. Best's tolerances for the company's current rating level. Net income trends have been favorable, and the company had a solid return on equity in 2017 at 11.4%. The ratings also recognize IA's diversified business profile and earnings stream, which has grown throughout Canada.

Partially offsetting these positive rating factors is IA's exposure, albeit somewhat reduced, to equity and interest rate volatility. The equity market exposure is largely through the organization's mutual fund and segregated fund lines of business in Canada. This exposure makes IA susceptible to lower fee income from assets under management and administration, lower sales from its savings and investment products and the possibility of higher reserve charges. However, IA's dynamic hedging program for its segregated fund products has performed well.

Source: A.M. Best Ratings Services, Inc. Used under license.