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AM Best Affirms Credit Ratings of Industrial Alliance Insurance and Financial Services Inc. and Its Subsidiaries

AM 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). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of IA. Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of "a" of IA’s U.S. life insurance entities within the IA American Life Group. (See below for a detailed listing of companies.) AM 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.

In addition, AM Best has upgraded the FSR to A (Excellent) from A- (Excellent) and the Long-Term ICR to "a" from "a-" of Dealers Assurance Company (DAC) (Columbus, OH). The outlook of these ratings has been revised to stable from positive.

The ratings of IA reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM). The company’s Canada operations continued to have favorable risk-adjusted capitalization at year-end 2019, supported by retained earnings and investment repositioning to reduce risk, but was offset partially by dividends.

The organization has been more active issuing debt recently; however, financial leverage remains within public guidance. IA’s strong operating performance is driven by favorable profitability and top-line trends, with premiums growth within individual wealth management and group savings and retirement sectors. The ratings also recognized IA’s diversified business profile and continued growth organically and through acquisition. IA’s ERM practices reflect a developed risk framework and formalized risk appetite, as well as its focus on strong risk governance throughout the organization.

The ratings of the IA American Life Group reflect its balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate ERM. The ratings also recognize the support it has received from IA through capital contribution and synergies from home office management of its actuarial reserves and investment portfolio. AM Best views the IA American Life Group’s core focus on individual life insurance favorably in the United States, with favorable top-line growth reported and statutory earnings growth in 2019.

The ratings of IAPG reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile, appropriate ERM and the implicit and explicit support it receives from its parent company. Solid risk-adjusted capitalization, prominent market presence, and favorable operating performance are offset partially by non-operationally based capital fluctuations, as well as elevated expenses experienced over the prior five years.

The ratings of DAC reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate ERM. The upgrade comes as a result of sustained, profitable underwriting and operating results. In addition, solid surplus growth over the prior 10-year period, tight risk management practices and a competent management team help to offset a concentrated product profile.

The FSR of A (Excellent) and the Long-Term ICRs of "a" have been affirmed with stable outlooks for the following entities of the IA American Life Group:

  • IA American Life Insurance Company
  • American-Amicable Life Insurance Company of Texas
  • Pioneer Security Life Insurance Company
  • Pioneer American Insurance Company
  • Occidental Life Insurance Company of North Carolina

The following Long-Term IRs have been affirmed with stable outlooks:

Industrial Alliance Insurance and Financial Services Inc.—
-- "a" on CAD 250 million 2.64% subordinated debentures, due 2027
-- "a" on CAD 400 million 3.30% subordinated debentures, due 2028
-- "a-" on CAD 125 million 4.60% non-cumulative perpetual preferred shares, Series B
-- "a-" on CAD 250 million 4.30% non-cumulative perpetual preferred shares, Series G

The following Long-Term IR have been assigned with stable outlooks:

Industrial Alliance Insurance and Financial Services Inc.—
-- "a-" on CAD 150 million non-cumulative preferred shares, Series I due 2023

The following indicative Long-Term IRs on securities available under the shelf registration have been affirmed with stable outlooks:

Industrial Alliance Insurance and Financial Services Inc.—
-- "a+" on senior unsecured debt
-- "a" on subordinated debt
-- "a-" on preferred shares

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent 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 additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Contacts

Kate Steffanelli  
Senior Financial Analyst­– L/H 
 
+1 908 439 2200, ext. 5063 
kate.steffanelli@ambest.com                        

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Brian Lynch 
Financial Analyst­– P/C 
 
+1 908 439 2200, ext. 5279 
brian.lynch@ambest.com                                

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com