AM Best and S&P have reached different conclusions about the same entity. In August 2025, S&P revised its outlook on Royal Bank of Canada Insurance Company Ltd. to negative, citing concentration in a single business source and slower-than-anticipated growth in the UK longevity market due to increased competition. AM Best has now affirmed its Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of "a+" (Excellent) for the same entity, with a stable outlook on both - a divergence that reflects genuinely different weightings of the same competitive dynamics rather than different information.
The Cayman Islands-domiciled entity, known as RBCICL, is a subsidiary of Royal Bank of Canada and operates as a specialist reinsurer of Canadian creditor life, longevity and other international insurance products. AM Best's assessment cited very strong balance sheet strength, strong operating performance, a neutral business profile and appropriate enterprise risk management as the basis for the affirmation.
Both agencies have acknowledged the same underlying pressure. AM Best's prior affirmation in May 2025 noted reduced new business growth in recent years due to increased competition and market conditions. S&P went further, flagging that RBCICL's expected expansion in the UK longevity segment had not materialised as anticipated, and that further deceleration could pressure the company's overall competitive strength. AM Best's current stable outlook does not appear to reflect a change in that competitive dynamic - the two agencies are applying different thresholds to the same facts.
RBCICL reported total net income of $707.8 million for the most recent fiscal year, driven by an insurance service result of $700.8 million. Total net premiums have remained around $2.5 billion, with net income ranging between $600 million and $800 million over the past five years - a consistent earnings record that underpins AM Best's operating performance assessment. The company also reported a return on assets of 36.4% as of year-end 2024, a figure that reflects RBCICL's specific balance sheet structure as a reinsurer with net negative insurance policy liabilities rather than a standard ROA comparison - readers should verify the precise basis of calculation before drawing cross-sector comparisons.
RBCICL holds a contractual service margin liability under the general measurement model of IFRS 17, which it adopted effective November 1, 2023. The transition contributed to a decline in reported capital, but the contractual service margin is expected to be released into earnings over time as the underlying reinsurance contracts run off. Ahead of that transition, RBCICL reduced dividends upstreamed to its immediate parent in fiscal year 2023 to enhance available capital and maintain risk-adjusted capitalisation levels.
RBCICL benefits from its parent's extensive Canadian banking branch network, which provides a steady source of creditor life loan protection business - effectively reinsuring the risk attached to loan protection insurance distributed through RBC's retail banking operations. That structural origination advantage is the source of both the company's consistent earnings and the concentration concern S&P has flagged: a single distribution source is a strength until it becomes a constraint.
The company's net negative insurance policy liabilities are made up predominantly from the longevity reinsurance product, under which it assumes longevity risk, making regular stress testing of mortality improvement assumptions a key part of its risk management framework.
AM Best noted that RBCICL does not formally benefit from an RBC guarantee but that the parent bank may provide additional capital at its discretion if needed to maintain risk-adjusted capitalisation. The parent is a substantial backstop - RBC reported approximately $20.4 billion in net income on $66.75 billion in revenue for fiscal year 2025.
