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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 16, 2014 12:04 PM (EDT)
A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Beneficial Insurance Limited (BIL) (New Zealand). The outlook for both ratings is stable.
The rating affirmations reflect BIL's adequate capitalization and the favorable growth of its core business.
On a risk-adjusted basis, BIL continues to demonstrate adequate capitalization to support its net required capital, as evaluated by Best's Capital Adequacy Ratio (BCAR). Although illiquid assets represent a relatively high percentage of its total investments, underwriting leverage remains conservative and the operation has no major exposure to volatile lines. Hence, BIL's overall capitalization is deemed adequate to support its overall underwriting and asset risks.
Since fiscal year 2009, both premium revenue and policies from BIL's pet insurance business have expanded rapidly. In addition, while overhead costs comprise over 95% of total operating expenses, the underwriting results are expected to benefit under continued growth from a lower expense ratio.
Partially offsetting these positive rating factors are BIL's narrow product focus and relatively small capital size.
BIL has a good profile in its core business; however, its mono-line profile poses some inherent product concentration risk. In addition, with a capital size of approximately NZD 3.6 million (around USD 3.1 million), BIL has a modest equity buffer against the minimum capital requirement under the Reserve Bank of New Zealand's non-life solvency standard.
Additionally, while loan receivables represent over two-thirds of BIL's invested assets, any sizeable reduction in the book value could put its capitalization under pressure.
BIL is well positioned for the current ratings. Meanwhile, any significant adverse changes to industry environment, material deviations from its target claim loss ratio or substantial asset impairment could lead to a downgrading of its ratings.
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.