2013-10-22 17:31:02 -
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb+” of Co-operative Life Limited (Co-op Life) (New Zealand). The outlook for both ratings is stable.
The ratings reflect Co-op Life's continued profitability, risk-adjusted capitalization and its affiliation with The Co-Operative Bank Limited (Co-op Bank).
Overall profitability remains positive as a result of favorable underwriting and investments. Claims experience has been positive for all products during financial year 2013, and this trend appears to have continued into the first half of financial year 2014. Co-op Life’s risk-adjusted capitalization is supportive of its ratings, as the company’s plan is to maintain capital at a higher than previously anticipated level until at least 2016.
Offsetting rating factors
include Co-op Life's continued contingent commitment to support certain debt holders of Co-op Bank and Co-op Life’s static capital level going forward. While significantly reduced, the remaining contingent commitment remains sizeable, resulting in a temporary drag on Co-op Life's Best’s Capital Adequacy Ratio (BCAR). A material deterioration in Co-op Bank’s financial strength could intensify this drag. As before, Co-op Bank is required to limit its insurance assets relative to its consolidated group assets. As a result, Co-op Life’s capital growth is constrained and could lag growth in underwriting risk.
Upward rating actions are unlikely at present. A material deterioration in Co-op Life's BCAR could result in downward pressure to 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 : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
A.M. Best Asia-Pacific Limited 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. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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