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FOR IMMEDIATE RELEASE
OLDWICK - MAY 27, 2016 01:40 PM (EDT)
A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of The Empire Life Insurance Company (Empire Life) (Kingston, Ontario, Canada). Concurrently, A.M. Best has affirmed the issue rating of “bbb+” on the CAD 300 million 2.87% subordinated unsecured fixed/floating debentures of Empire Life due May 31, 2023. Additionally, A.M. Best has affirmed the issue rating of “bbb” on the CAD 149.5 million non-cumulative rate reset Series 1 preferred shares. The outlook for each rating is stable. Empire Life is a subsidiary of E-L Financial Corporation Limited (E-L Financial), which operates as a publicly traded Canadian investment and insurance holding company.
The ratings reflect Empire Life’s consistently profitable operations and favorable risk-adjusted capital. This is supported by its continued earnings growth and sustainable market presence in Canada with multiple lines of business. Empire Life is among the 10 largest life insurance companies in Canada (based on general and segregated fund assets), although the company has a 6% market share or less in its three major product lines. The company markets a broad range of life insurance and investment products, employee benefit plans and financial services to individuals, professionals and the small-to-medium group market through multiple distribution channels. In addition, Empire Life maintains a high quality and diverse set of assets that are enhanced by its growing surplus position and hedging program.
Detracting from A.M. Best’s view of Empire Life is the significant equity exposure in the company’s surplus account, segregated fund products and its larger-than-peer equity holdings. The equity risk products, including those with guaranteed minimum withdrawal benefits, will continue to make Empire Life’s operating income potentially more volatile, which is only partially reduced due to the instituted hedging program. A.M. Best notes that Empire Life will continue to face challenges in expanding its operations in its core business lines due to the competition from larger Canadian life insurance companies. Similar to other life insurers in Canada, Empire Life’s earnings also have been negatively impacted by the continued low interest rate environment and recent equity market volatility.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.