AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of TD Reinsurance (Barbados) Inc. (TD Re) (Barbados). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect TD Re’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
TD Re is a life and general insurance reinsurer that ultimately is owned by The Toronto-Dominion Bank (TD Bank). TD Re principally reinsures credit insurance policies underwritten by third-party life insurance carriers on consumer loans originated by TD Bank’s Canadian retail branches. The company also has reinsured homeowners and private passenger auto insurance with a 25% quota share agreement with another TD Bank subsidiary since 2017. Despite the COVID-19 pandemic environment, TD Re maintained its high return on equity from favorable underwriting results and a favorable risk-adjusted capital position through its fiscal year-end 2022. The company also continues to maintain multiple high quality investment portfolios that are managed to match the specific liability profiles of the business it supports.
These strengths are offset partially by a dependence on Canadian consumer loan originations for growth and the competitive reinsurance environment. Due to fewer face-to-face transactions since the start of the COVID-19 pandemic, creditor premiums have trended lower, although a strategic focus of the parent has been to digitize banking services to support sales growth. Furthermore, while earnings have been favorable for the general insurance line of business to date, the homeowners and private passenger auto lines of business are considered riskier and more capital-intensive than the creditor business.
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