2013-12-20 17:32:02 -
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Cigna Life Insurance New Zealand Limited (CLINZ) (New Zealand). The outlook for both ratings is stable.
The affirmation of the ratings reflects CLINZ's strong risk-adjusted capitalization, consistently positive overall operating results and the large size of its high quality investment portfolio.
Under CLINZ’s baseline projections, its risk-adjusted capitalization is expected to remain strong. Overall profitability has been positive and has been complemented by CLINZ’s large, high quality investment portfolio, which is expected to remain at well over 100% of net premium revenue.
Offsetting rating factors include new product profitability and CLINZ’s reliance on a small number of external partners to generate a large
proportion of new business premiums. CLINZ has been diversifying beyond its core credit insurance business, which has resulted in an increase in the claims ratio. Management believes that the company’s new products will improve overall profitability by “upselling” new customers to more profitable products and expected expense efficiencies, and that some new products will show better persistency in the long run than the core credit book. While CLINZ has grown its own direct channel, it remains reliant on external partners, some of which have their own competing insurance operations, to generate the majority of its revenues. Company projections do not indicate any capital repatriation. However, CLINZ is capitalized well above its regulatory solvency target, and reducing its capital to that target could impact capitalization as measured by the Best’s Capital Adequacy Ratio (BCAR).
CLINZ is well positioned at its current rating level. A significant deterioration in its 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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