AM Best


A.M. Best Affirms Credit Ratings of Kiwi Insurance Limited


CONTACTS:

Sin Yee Chuah
Associate Financial Analyst
+65 6303 5022
sinyee.chuah@ambest.com

Jason Shum
Associate Director, Analytics
+65 6303 5020
jason.shum@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

SINGAPORE - MAY 24, 2018 11:48 AM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Kiwi Insurance Limited (Kiwi) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Kiwi’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Kiwi’s balance sheet strength is supported by its solid risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite a high dividend payout ratio, the company has moderate underwriting leverage and a favorable liquidity position. However, the company’s capital size is modest compared with other New Zealand life insurers.

Kiwi has a track record of favorable earnings, derived from in-force business and stable investment income. Its five-year average return on premium is more than 20%. However, its recent underwriting results have been subdued due to significant expenses and capital expenditures being incurred ahead of realized sales. As the company has generated strong premium growth consistently over the past five years, A.M. Best expects that the operation will begin to reflect economies of scale in the medium term.

As an affiliated company of New Zealand Post Limited (NZPL) and Kiwibank Limited (Kiwibank), Kiwi benefits from cross-selling opportunities, low acquisition costs and shared resources within the group.

However, the life insurer has a relatively small in-force portfolio and a low penetration rate among the bank’s customer base. Kiwi transitioned from an outsourced model to an in-house operation in 2011; hence, its future success will rely on how well it can leverage its affiliates’ distribution platforms and customer bases to generate more business volume.

Kiwi has a developed risk management program based on its current size and complexity. The company has demonstrated an overall satisfactory ability to address most of its risks, primarily through adequate pricing and holding liquid assets in its investment portfolio. Therefore, A.M. Best considers Kiwi’s risk management capabilities as aligned appropriately with its risk profile.

Kiwi is well-positioned for its current rating level. Negative rating pressure may occur if its capitalization erodes significantly below its target surplus capital, or if there is material deterioration in its operating performance. In addition, negative rating pressure also could occur if there is any adverse development in the financial strength of NZPL or Kiwibank.

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

This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.


Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.

AMB# Company Name
059783 New Zealand Post Limited
092400 nib nz insurance limited