OLDWICK: AM Best has recorded negative implications for the Financial Strength Rating of Blue Cross Life Insurance Company of Canada (BCLIC) after it selected an investment manager facing fraud investigations.
AM Best has recorded negative implications for the Financial Strength Rating of Blue Cross Life Insurance Company of Canada (BCLIC) and placed the ratings of A- (Excellent) and the Long-Term Issuer Credit Rating of a- (Excellent) under review.
This Credit Rating action follows notification by the Ontario Securities Commission (OSC) that BCLIC’s recently selected Toronto-based investment manager, Bridging Finance Inc., is being investigated for mismanaging and misappropriating funds.
BCLIC recently selected Bridging Finance Inc. to manage short-term fixed income assets for BCLIC and its shareholders/distributors. Of the amount BCLIC allocated to this manager, BCLIC believes that nearly 60% has been invested. PriceWaterhouseCoopers Inc. was appointed as the receiver of these assets, and the valuation of those is unknown at the present time.
The impact to BCLIC’s balance sheet will be offset materially as a result of its unique relationship with its shareholders/ distributors. However, AM Best notes that its assessments for the company’s overall balance sheet strength and enterprise risk management may be lowered prospectively as a result of this action, and that BCLIC’s business profile could be impacted due to potential reputational damage arising from this action.
AM Best will continue to monitor the situation closely. The ratings will remain under review until there is increased clarity regarding the OSC investigation and any impact to BCLIC and its shareholders.