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

The ratings reflect Scotia 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.

Scotia Re transitioned to IFRS 17 reporting on Oct. 1, 2023. The company reported approximately USD 73.0 million of equity at fiscal year-end 2024, an increase from roughly USD 48.8 million for fiscal year-end 2023. This compared with previously reported equity of about USD 53.9 million at year-end 2023 on an IFRS 4 basis (i.e. pre-IFRS 17). The majority of Scotia Re’s business is credit life, health and disability reinsurance business, which has been accounted for on the General Measurement Model under IFRS 17. The company holds a contractual service margin liability, which partly contributed to a decline in reported capital on transition to IFRS 17 but is expected to be released into earnings over time. In 2024, Scotia Re paused dividends to its parent company, BNS International (Bahamas) Limited, which is an intermediate holding company ultimately owned by The Bank of Nova Scotia (Scotiabank). AM Best expects Scotia Re to maintain its strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR).

The company’s very favorable credit life reinsurance underwriting results over the long term have balanced overall operating results. Scotia Re’s business purpose is to reinsure the insurance protection offered to customers of Scotiabank through its International Banking retail network, allowing the bank to undertake and manage insurance risk. Scotia Re’s business is well-diversified across various international markets across the Caribbean and Central and South America.

Scotia Re is owned ultimately by Scotiabank, which is among the leading banks in Canada, as measured by market capitalization. The parent bank is a strong organization with approximately CAD 84 billion of total equity at fiscal year-end October 2024 and CAD 1.4 trillion in assets. In addition, the bank earned approximately CAD 7.9 billion in net income on CAD 34 billion in revenue in fiscal-year 2024. AM Best notes that Scotiabank does not guarantee support but may at its discretion provide additional capital should Scotia Re need support to maintain its capital or liquidity targets.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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