SINGAPORE–(BUSINESS WIRE)–AM Best was removed from review with development implications and affirmed nib nz insurance’s financial strength rating of A- (Excellent) and issuer long-term credit rating of “a-” (Excellent) limited (nib nz insurance) (New Zealand) . The outlook attributed to these Credit Ratings (ratings) is stable. Concurrently, AM Best withdrew the ratings as the company requested to no longer participate in AM Best’s interactive ratings process.
These rating actions follow the completion of the acquisition of 100% ownership of Kiwi Insurance Limited (Kiwi Insurance) on April 29, 2022, by nib nz holdings limited (nib nz holdings). The transaction, previously announced in November 2021, also includes the establishment of an exclusive relationship with Kiwibank Limited (Kiwibank), which will see the bank refer its retail clients to nib nz holdings for their life insurance needs. Following the transaction, Kiwi Insurance was renamed nib nz insurance.
The ratings reflect the strength of nib nz insurance’s balance sheet, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings reflect a neutral impact from ultimate ownership of the company by nib holdings limited (nib group), an Australian Stock Exchange (ASX)-listed health insurer that provides health insurance in Australia and New Zealand.
The assessment of nib nz insurance’s balance sheet strength is supported by its risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), which was at the highest level at the end of fiscal 2021 and is expected to remain at this level over the medium term period. This reflects the company’s moderate underwriting leverage and conservative investment allocation. In the medium term, AM Best expects full earnings retention to support the company’s business initiatives. A partially offsetting balance sheet factor is nib nz insurance’s modest capital base, which increases the sensitivity of capital adequacy to stress scenarios and variations in future performance.
AM Best considers the operating performance of nib nz insurance to be adequate. Despite a moderate level of volatility over the past five years, the company achieved a weighted average return on equity of 9% over the period (fiscal years 2017-2021). Overall earnings during this period reflect a combination of favorable underwriting performance coupled with strong investment returns. Looking forward, AM Best expects a robust pricing strategy, controlled expense management and steady revenue growth to support continued adequate operating performance over the medium term.
AM Best considers nib nz insurance’s business profile to be neutral. The company is a small insurer in the life insurance sector in New Zealand, with a market share of less than 1%, based on gross written premiums in 2021. Despite this, the assessment of the profile The company’s business takes into account a strong distribution network through the establishment of an exclusive relationship with Kiwibank to distribute the products of nib nz holdings to its retail customers. Additionally, as a member of the nib group, nib nz insurance enjoys common branding and access to the group’s shared resources.
AM Best considers nib nz insurance’s ERM approach to be appropriate given the size and complexity of the company’s current operations. Although the company is expected to be exposed to a level of integration risk in the near term, these risks should be managed appropriately. nib nz insurance’s risk management capabilities are generally aligned with its risk profile.
Based on an assessment of the nib group’s credit fundamentals, as well as consideration of the perceived strategic importance and integration of nib nz insurance into the group, there is no rating increase or downgrade. has been applied to nib nz insurance ratings.
Ratings are communicated to rated entities before publication. Unless otherwise indicated, the ratings have not been changed as a result of this communication.
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