KUALA LUMPUR, Sept 7 (Bernama) – In a statement today, A.M. Best – a global credit rating agency -- affirmed the financial strength rating of B++ (good) and the long-term issuer credit rating of ‘bbb’ for Beneficial Insurance Ltd (BIL) New Zealand.
It further added that the outlook of these ratings is stable and reflects BIL’s balance sheet strength, which A.M. Best categorises as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
BIL’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is currently at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
Over the medium term, A.M. Best expects the company’s planned high level of underwriting growth to drive a notable increase in net required capital, however, strong internal capital generation is expected to enable it to maintain at least very strong risk-adjusted capitalisation.
Offsetting balance sheet factors include the company’s small absolute capital base, which increases its sensitivity to shock events and adverse changes in prospective performance, growth or dividend payouts.
BIL – which is 100 per cent New Zealand owned and operated – has a track record of strong operating performance, with the company having reported a five-year average return on equity of 18 per cent (fiscal years 2014-2018).
Profitability over this period has been driven by underwriting operations and a good five-year average combined ratio of 90 per cent.
Prospectively, A.M. Best expects strong underwriting performance to be supported by continued low loss ratios and from a gradually improving expense ratio, as the company benefits from economies of scale as it executes planned business growth.
BIL’s largest line of business is pet insurance, which currently accounts for more than 90 per cent of gross written premiums. The other lines are motor breakdown insurance and consumer credit insurance.
--BERNAMA
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