2014-04-30 18:46:01 -
A.M. Best has affirmed the financial strength rating of B (Fair) and issuer credit rating of “bb+” of Pinnacle Life Limited (New Zealand). The outlook for both ratings remains stable.
The ratings reflect Pinnacle’s low product risk profile, direct distribution capabilities and a lapse ratio consistently below the market average.
Pinnacle mainly underwrites simple life insurance in the term life segment of the New Zealand market, relying primarily on direct distribution. In addition, the company continues to maintain a steady niche in its targeted market segment.
Offsetting rating factors include Pinnacle’s high expense ratio and the uncertainty of the impacts changes in the Reserve Bank of New Zealand's (RBNZ) solvency requirements will have on the company’s solvency position.
Although Pinnacle has the flexibility to
reduce its acquisition costs, operating results have been challenged by high maintenance and other expenses in recent years. To achieve economies of scale, it is believed that the company will need more solvency capital to fund a higher level of future new business growth.
A substantial improvement in Pinnacle’s solvency capital and margin could lead to positive rating actions. However, a negative deviation from the company’s forecasted solvency margin as a result of higher-than-expected expenses or regulatory changes could lead to downward movement in the 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.
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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