A.M. Best Affirms Ratings of CIBC Reinsurance Company Limited.
CIBC Re is a life reinsurance subsidiary that is ultimately owned by the Canadian Imperial Bank of Commerce (CIBC) (Toronto, Ontario). CIBC Re principally reinsures credit insurance policies that have been underwritten by third-party life insurance carriers on consumer mortgages, loans and credit cards originated by CIBC's Canadian branches. Then, CIBC Re retrocedes these risks to several unaffiliated reinsurers and in turn, accepts non-Canadian risks of a similar nature from those unaffiliated reinsurers. To a lesser extent, CIBC Re also participates in excess retrocession pools within the United States and Canada under a variety of treaties.
The rating affirmations reflect CIBC Re's continued trend of strong capitalization, favorable operating earnings and its conservative investment portfolio. The ratings factor in CIBC Re's enterprise risk management framework that is well integrated into CIBC and the high credit quality and strong liquidity of the company's investment portfolio, which consists entirely of term bank deposits with a CIBC affiliate.
These strengths are partially offset by CIBC Re's dependence upon consumer loan originations for growth, which has a potential to decline if consumer loan originations slow in the Canadian market. If this were to occur it would impact CIBC Re's volume of reinsurance received.
Additionally, a further decline in economic conditions in Europe could impact CIBC Re's ability to retrocede assumed risks to its European counterparties.
CIBC Re is considered well positioned at its current rating level. Positive rating actions are unlikely in the near or intermediate term. Factors that may cause negative rating actions include significant adverse changes in CIBC Re's capitalization, operating performance or business model.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright [c] 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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|Date:||Jul 17, 2012|
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