DBRS Morningstar Confirms Ratings on The Equitable Life Insurance Company of Canada at A (high), Stable Trends.
ENPNewswire-August 31, 2021--DBRS Morningstar Confirms Ratings on The Equitable Life Insurance Company of Canada at A (high), Stable Trends
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Release date- 30082021 - DBRS Limited (DBRS Morningstar) confirmed the Financial Strength Rating and Issuer Rating of The Equitable Life Insurance Company of Canada (Equitable Life or the Company) at A (high).
All trends are Stable.
KEY RATING CONSIDERATIONS
The ratings and trends reflect the Company's established presence in the Canadian life insurance market where it offers a diversified product mix to individuals and small to medium-sized employer groups that consistently produces strong profitability metrics. Equitable Life's strong balance sheet is supported by strong liquidity and capital positions.
The ratings and trends also consider Equitable Life's distribution strategy, which is heavily reliant on the independent advisor channel. As such, the loss of a major distributor could cause a material decline in market share. While the investment portfolio is still composed of high-quality securities, there has been a gradual shift toward investing in more bonds and private placements rated BBB, which account for 26.4% of the bonds and private placements portfolio, which is relatively high compared with some of its peers.
RATING DRIVERS
The ratings are well placed in the current rating category. However, over the longer term, the ratings would be upgraded if the Company were to strengthen its market positions significantly while maintaining strong profitability metrics and appropriate capitalization buffers.
Conversely, the ratings would be downgraded if there is a sustained material deterioration in profitability or capitalization. The ratings would also be downgraded if Equitable Life were to lose a major distributor, resulting in a significant decline in market share.
RATING RATIONALE
The Company operates in a market dominated by a few large insurance companies; however, it has retained considerable market share in the middle-market segment in its major lines of business. The Company's smaller size makes it more flexible in terms of responding to changing market conditions and the development of new products. Equitable Life operates in Canada. The Company continues to focus on increasing market share organically, while strengthening its product offering, competitiveness, and digital capabilities. Equitable Life's product portfolio mix offers...
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