A.M. Best has assigned a debt rating of “a+” to the $1.2 billion 5.75 percent secured support notes, due 31 December 2058, issued by Redding Funding, a Nova Scotia company and a wholly owned subsidiary of Wilton Re. The rating outlook assigned is stable.
The notes were used to fund statutory reserve requirements for a block of life insurance policies ceded by Wilton Re to Redding Reassurance Company 2, a South Carolina domiciled special purpose financial captive insurance company.
Concurrent with the issuance of the notes, the Canada Pension Plan Investment Board, the parent of Wilton Re, contributed $1.2 billion, which, in turn, contributed the amount to Redding Funding to collateralise the notes.
The collateral is to be invested based on specified investment guidelines. In addition, the notes are guaranteed by Wilton RE. The guarantee is subordinated to any and all senior debt of Wilton Re.
A.M Best stated: “The assigned rating represents A.M. Best’s current opinion as to the issuer’s ability to meet its financial obligations to the note holders when due.”
“The rating takes into consideration the following: the notes issued are collateralised by a pool of invested assets; the losses of the collateral portfolio due to investment defaults over the notes legal maturity period; and the support provided by [Wilton Re] as guarantor of Redding Funding’s payment obligations.”
The agency has said that the ratings could be upgraded or downgraded and/or the outlook revised if “material changes” occur on the credit ratings of the underlying collateral, or in the issuer credit rating of the guarantor.
