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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 07, 2014 09:31 AM (EDT)
New Zealand non-life and life insurers have been forced to focus on aspects of their business other than investments to ensure continued profitability, as a result of the low interest rate environment and heavy losses from the 2010-11 Christchurch earthquakes, according to a new report from A.M. Best.
This special report, titled "New Zealand: Low Interest Rate Climate Sharpens the Underwriting Focus," states that while outstanding Christchurch earthquake claims have so far denied many non-life insurers the full benefits of post-catastrophe underwriting remediation and strengths in the overall economy, there has been significant improvement on newly underwritten business.
"In what remains a low investment yield environment, the New Zealand non-life market seems ready for an underwriting-led improvement in overall profitability, said Chi-Yeung Lok, a financial analyst.
The New Zealand life industry has seen stable operating performance; however, capital and surplus has been increasing over the past five years, which is driving down return measures. Other risk areas also have the potential to disrupt stability in profits.
"Persistency risk has the potential to become a significant detriment to long-term, profitable growth. Upfront commissions continue to be at high levels, notably within the independent financial adviser market in New Zealand" said Senior Financial Analyst Ken Chow.
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=223155 .
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.