Best’s News & Research Service - July 26, 2017 09:08 AM (EDT)
A.M. Best Affirms Credit Ratings of Youi NZ Pty Limited
- July 26, 2017 09:08 AM (EDT)
Singapore //BestWire// - A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Youi NZ Pty Limited (Youi NZ) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Youi NZ’s strong balance sheet, which is due to the company’s low underwriting leverage, as well as its prudent reinsurance program and conservative investment approach. In addition, actual claims experience during the company’s first three years of operation were largely consistent with the assumptions used in pricing its policies.
Partially offsetting these positive rating factors is Youi NZ’s high expense ratio, which is due to the company having a small premium base from which to cover its operating expenses. Additionally, Youi NZ’s ceded reinsurance leverage ratio (the sum of outward reinsurance expense and reinsurance assets divided by net assets) is over 100%, which suggests a high level of dependence on reinsurance.
While positive rating actions are unlikely in the near term, a material decline in Youi NZ’s risk-adjusted capitalization, due to a failure to meet its projected underwriting performance, may trigger negative rating actions.
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.
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