Please note: This story was revised June 16 to correctly identify Blue Cross Life Insurance Company of Canada as the entity being placed under review, and to include follow-up comments from the company’s spokesperson.
AM Best, of A.M. Best Ratings Services Inc., announced June 11 that it is reviewing the Blue Cross Life Insurance Company of Canada’s financial strength and credit ratings after the company recently selected Bridging Finance Inc. to manage short-term, fixed income assets for the company and its shareholders.
According to the ratings company, “under review” means the insurer’s credit ratings could potentially see a near-term change, usually within six months, as the result of a recent event or an abrupt change in the company’s financial condition. “Negative implications,” meanwhile, further indicates a reasonable likelihood that the company’s credit ratings will likely be lowered based on AM Best’s opinion of the event in question.
Blue Cross Life, a manufacturer of life and disability insurance, is owned by six Blue Cross entities, including Alta Blue Holdings LTD (Alberta Blue Cross), the Canassurance Insurance Company in Ontario and Quebec, Uni-Blue Inc. (Manitoba Blue Cross), PBC Health Benefits Society (Pacific Blue Cross), Blueco Services Inc. (Saskatchewan Blue Cross) and Bluecorp Holdings Inc. (Medavie Blue Cross). According to the company’s AM Best credit report, Medavie owns 28.5 per cent of Blue Cross Life, with the remaining entities owning 14.3 per cent each. The company currently has an AM Best financial strength rating of A- (excellent) and a long-term issuer credit rating of a- (excellent).
The rating action by AM Best follows an announcement made by the Ontario Securities Commission (OSC) that Toronto-based investment manager, Bridging Finance is being investigated for mismanaging and misappropriating funds. Blue Cross recently selected Bridging Finance as a third-party manager. Of the amount it had allocated to this manager, Blue Cross believes nearly 60 per cent has been invested. All of the funds managed by Bridging Finance have since ceased trading; PriceWaterhouseCoopers Inc. was appointed as the receiver of the assets in April 2021. AM Best says their valuation is unknown at the present time.
In a statement to the Insurance Portal, company spokesperson, Jacqueline Zonneville, manager of corporate communications for Medavie, says the company continues to work with Bridging Finance Inc.’s receiver and with its legal counsel and other advisors to protect the company’s investment.
AM Best, meanwhile, adds that Blue Cross’s business profile could be impacted due to potential reputational damage. “The ratings will remain under review until there is increased clarity regarding the OSC investigation and any impact to Blue Cross Life Insurance Company of Canada and its shareholders,” AM Best analysts write.
"We are aware that AM Best has placed the credit rating of Blue Cross Life Insurance Company of Canada (Blue Cross Life) under review,” Zonneville adds. “We can confirm that Blue Cross Life recently selected Bridging Finance Inc. as a third-party service provider to manage certain short-term fixed income assets. Blue Cross Life is confident in our longstanding and strong financial position. Despite this incident, our regulatory capital ratio (LICAT) remains well above our target and above the industry average, and our net income remains in excess of budget. All our stakeholders can continue to expect the level of service with which they have become accustomed. We look forward to working with AM Best regarding the assessment of our rating.”
