2013-09-17 18:03:01 -
A.M. Best Asia-Pacific Limited 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 high percentage of its total investments, underwriting leverage is 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, premium revenue and policies covered
for BIL's pet insurance business have compounded by 39% and 30%, respectively.
While overhead costs comprise 96% of total operating expenses, as the company continues to grow, the underwriting results are expected to benefit 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 3.5 million, BIL has a modest equity buffer against the minimum capital requirement under the Reserve Bank of New Zealand’s non-life solvency standard.
A.M. Best also takes into account that while loan receivables represent 86% of BIL's invested assets, any sizeable reduction in the book value could put its capitalization under pressure.
An upgrading of BIL’s ratings is unlikely in the near term. Meanwhile, any significant adverse changes to industry environment, underwriting results or capitalization 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 : 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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