2013-12-19 19:32:04 -
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A+ (Superior) and issuer credit rating of “aa-” of Sovereign Assurance Company Limited (Sovereign) (New Zealand). The outlook for both ratings is stable.
The affirmations reflect Sovereign’s strong business profile, supportive risk-adjusted capitalization, and financial flexibility as part of the Commonwealth Bank of Australia (CBA) group.
Sovereign continues to be a market leader in the New Zealand life insurance market, as measured by premium revenue. The company has a competitive advantage in its diversified distribution capabilities in both the advisers and bancassurance channels due to its close affiliation with the ASB Bank, which provides Sovereign with a strong brand recognition and access to its nationwide distribution network.
Risk-adjusted capitalization, as measured by
Best’s Capital Adequacy Ratio (BCAR), remains supportive of Sovereign’s ratings as historical operating performance continues to be consistently positive. While historically the company repatriated high levels of dividends to its parent, it is expected to benefit from the financial flexibility and strong risk management capabilities as a subsidiary of the CBA Group.
Offsetting rating factors include the highly competitive environment of the New Zealand life insurance market—particularly in the adviser channel—which is likely to continue to put pressure on Sovereign’s new business market share and profitability, as well as the potential adverse impact on the persistency experience of in-force business.
Sovereign is well positioned at its current rating level. Downward pressure on the ratings could result if there is a significant deterioration in its risk-adjusted capitalization and/or operating performance.
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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