2014-03-26 18:02:04 -
A.M. Best has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Partners Life Limited (Partners) (New Zealand). The outlook for both ratings remains stable.
The rating affirmations reflect Partners’ adequate risk-adjusted capitalization, supported by a series of capital infusions since its establishment in 2010, and improved diversification on its reinsurance arrangement using highly-rated reinsurers.
Offsetting these positive rating factors are the company’s negative operating cash flow position and the uncertainty of the changes in the Reserve Bank of New Zealand’s (RBNZ) solvency requirement will have on Partners’ solvency position. Partners has heavily used reinsurance to support the high upfront cost of writing new business in New Zealand’s independent financial advisor market. As a result, the
RBNZ’s second consultation paper on financial reinsurance in October 2013 may result in an increase in the solvency requirement for Partners once the final standard is determined and released by the RBNZ and subsequent to a transition period. If the pace of business growth is constrained by capital, this could delay the company from building up premium revenues and achieving positive operating cash flow. The company is mitigating these risks by continuing its annual capital raising.
Upward movements to the ratings are unlikely in the short term. The company's ratings could be downgraded if risk-adjusted capitalization falls below its forecast provided to A.M. Best due to a lower than anticipated capital infusion or a decline in operating performance due to deterioration in persistency.
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.
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. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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