The American ratings agency A. M. Best has upgraded the issuer credit rating of Wilton Re from "a" to "a+".

"The rating upgrades reflect Wilton Re’s solid risk-adjusted capitalization level, its recent increased transaction activity, strong operating earnings and high quality balance sheet and liability structure, which are principally focused on mortality risk," reads the ratings announcement. A. M. Best says the change also recognizes the willingness of the insurer's new owner, the Canada Pension Plan Investment Board (CPPIB), to keep providing the company with capital.

The CPPIB funded Wilton Re's recent purchase of Transamerica Life Canada, which the ratings agency believes will add to the insurer's geographical diversification by providing an in-force book of Canadian life insurance business and a platform to expand into the country's marketplace. "Following the transaction, it is expected that Wilton Re and its insurance subsidiaries will remain adequately capitalized," says A. M. Best.

However, A.M. Best warns that the positive rating is offset somewhat by persistently low interest rates, which have reduced revenue from fixed income investments. "Other offsetting rating factors include potential execution risks and competition associated with acquiring larger blocks of business," concludes the ratings agency.