KUALA LUMPUR, March 22 (Bernama) -- AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of ‘bb+’ of Pinnacle Life Limited (Pinnacle Life) New Zealand, resulting in stable outlook.
The ratings reflect Pinnacle Life’s balance sheet strength, which AM Best assessed as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Pinnacle Life’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which AM Best expects to remain at the strongest level over the medium term, albeit with a declining trend driven by increased underwriting risk as the company executes its strategic growth plan.
The company has experienced some volatility in its regulatory solvency ratio over recent years. Nonetheless, AM Best expects prospective regulatory solvency to be managed to an adequate level over the medium term.
However, AM Best notes that given the company’s small absolute capital base, capital adequacy remains sensitive to the rate of new business growth, changes in the interest rate environment and shock events.
Based on a statement, AM Best also views the company as having a high reliance on third-party reinsurance.
AM Best views Pinnacle Life’s operating performance as adequate, with the company having generated a five-year average return-on-equity ratio of 9.9 per cent (fiscal-years 2016-2020).
The agency considers Pinnacle Life’s business profile as limited, largely reflecting the company’s small-scale of operations, as well as its low product and geographical diversification in New Zealand.
More details on the ratings at www.ambest.com
-- BERNAMA
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