AM Best


A.M. Best Affirms Ratings of Provident Insurance Corporation Limited


CONTACTS:


Chi-Yeung Lok
Financial Analyst
+852-2827-3414
chi-yeung.lok@ambest.com

Ken Chow
Senior Financial Analyst
+852-2827-3426
ken.chow@ambest.com

Christopher Sharkey
Manager, Public Relations
+(1) (908) 439-2200, ext. 5159
christipher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
+(1) (908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

HONG KONG - AUGUST 01, 2014 12:28 PM (EDT)
A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb" of Provident Insurance Corporation Limited (PICL) (New Zealand). The outlook for both ratings remains stable.

The ratings reflect PICL's balance sheet strength and business profile. PICL's risk-adjusted capitalization remains adequate and is supported by shareholder commitment, allowing full earnings retention until 2019. PICL's business profile benefits from the business it secures from several affiliated car dealerships.

Offsetting these positive rating factors is the delayed earnings pattern of its products, which results in underwriting risk growing faster than capital, especially during PICL's start-up phase. In addition, the start-up nature of PICL's long duration underwriting portfolio increases its risk and sensitivity to unfavorable assumption changes. After initial plans to secure a partner for its commission income business proved unsuccessful, PICL is currently evaluating new partners to launch its commission income business. As a result, the company has revised down its commission income forecast from its original budget, thus lowering capital projections.

Negative rating actions could occur if a deviation from PICL's business plan results in a material decline of its risk-adjusted capitalization.

The methodology used in determining these interactive 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.

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

 


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AMB# Company Name
092486 Provident Insurance Corporation Limited