Wilton Re gets long-term issuer default rating BBB
Fitch Ratings has affirmed Wilton Re’s long-term issuer default rating at ‘BBB’.
The credit ratings agency also affirmed the financial strength ratings of its United States and Bermuda operating companies at ‘A-’.
The rating outlook is stable.
Fitch said Wilton Re has an efficient capital management strategy, with capital targets below those of similarly rated peers.
The firm’s Prism score was at the high end of ‘adequate', or 97 per cent of ‘strong’ at year end 2024, which is in-line with the prior year and rating expectations.
Wilton Re’s ratings are one notch higher than Fitch’s view of its stand-alone credit quality, due to its ownership by Canada Pension Plan Investments.
The uplift recognises Wilton Re as a noncore subsidiary that is an important investment platform for CPP.
Fitch does not rate CPP but believes it to be of the highest credit quality based on its scale and importance in supporting the CPP.
Fitch said CPP has demonstrated a willingness to support Wilton Re.
“In recent years, capital has flowed upstream given the company’s excess capital position relative to its targets,” Fitch said.
They considered Wilton Re’s position in the market acquiring runoff blocks as strong. However, the firm said the market is episodic and increasingly competitive.
“Favourably, the company has a diversified profile across mortality, longevity, and morbidity risks,” Fitch said.
Recent transactions have not materially changed the company’s risk profile, and Fitch viewed the company as disciplined in its key pricing assumptions.
Last December, Wilton Re completed a reinsurance transaction with Prudential Financial, assuming $11 billion of universal life with secondary guarantee reserves.
Fitch viewed this transaction as neutral, with the risk of the block partially offset by enhanced scale and diversification.
The company also re-underwrites key assumptions of the block, mitigating potential adverse policyholder experience.
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