A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" of RBC Life Insurance Company (RBC Life) (Mississauga, Ontario). The outlook for both ratings is stable.

RBC Life's ratings reflect its adequate risk-adjusted capitalization, improved earnings in core business lines, as well as the strong brand name recognition of the Royal Bank of Canada (RBC) [TSX and NYSE: RY] in the Canadian market. RBC Life operates as the Canadian life insurance operation of its parent, RBC, under RBC Insurance, a division of RBC.

RBC Life maintains a significant market position in Canada in the individual living benefits and group long-term disability insurance markets. RBC Life also has maintained a focus on growing its individual and group life segments through an increase in their range of insurance product solutions and improvement of their cross-selling capabilities. RBC Life has seen increased sales of targeted insurance products through propriety distribution sources and continued expansion of wealth product offerings. A.M. Best believes RBC will continue to support RBC Life's growth initiatives, if needed, as it has demonstrated in the past.

Partially offsetting these positive rating factors are the challenges RBC Life faces while positioning itself to increase market share in the competitive Canadian individual life and group accident and sickness markets, as well as the challenges due to the continued low interest rate environment. Earnings have fluctuated in recent periods and while positive in 2014, were impacted by higher than expected morbidity rates in the individual and group disability lines of business. A.M. Best also notes that RBC Life maintains a modest position in the wealth management market through its general account annuities and segregated funds.

The current ratings of RBC Life are adequately supported by key financial measures surrounding risk-adjusted capitalization, operating results and business profile for the near to medium term. Key factors that could result in negative rating actions include a significant and sustained decline in RBC Life's risk-adjusted capitalization, large investment losses or deterioration of operating performance on the individual and group accident and sickness lines that does not meet A.M. Best's expectations over a sustained period.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Evaluating Non-Insurance Ultimate Parents

• Rating Members of Insurance Groups

• Risk Management and the Rating Process for Insurance Companies

• Understanding BCAR for U.S. and Canadian Life/Health Insurers

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center .

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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