AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Scotia Insurance (Barbados) Limited (SIB) (Barbados). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect SIB’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.

SIB transitioned to IFRS 17 reporting on Oct. 1, 2023. The company reported approximately CAD 294.5 million of equity at fiscal year-end 2024, an increase from roughly CAD 285.3 million for fiscal year-end 2023. This compared with previously reported equity of about CAD 312.6 million at year-end 2023 on an IFRS 4 basis (i.e. pre-IFRS 17). The majority of SIB’s business is creditor life, health and disability reinsurance business for which the Premium Allocation Approach has been utilized under IFRS 17. As a result, there was only minor impact to equity on transitioning from IFRS 4 to IFRS 17 for most of SIB’s portfolio. For the company’s non-creditor business, SIB holds a contractual service margin liability on its profitable reinsurance contracts, which partly contributed to a decline in reported capital on transition to IFRS 17 but is expected to be released into earnings over time. SIB’s business purpose is to reinsure the insurance protection offered to Scotiabank customers through its Canadian retail banking network, allowing the bank to undertake and manage insurance risk. SIB reported profit of approximately CAD 379.6M on an IFRS 17 basis compared with about CAD 350.0 million year-on-year, primarily due to higher insurance revenue.

The stable outlooks reflect SIB’s very strong balance sheet strength assessment supported by consistently strong operating performance. The company’s favorable operating return on equity on a longstanding basis provides significant support to the balance sheet and reflects SIB’s appropriate underwriting practices in its core Canadian creditor life reinsurance product.

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