KUALA LUMPUR, Dec 15 (Bernama) -- AM Best has revised the outlooks to positive from stable and affirmed the financial strength rating of B (Fair) and the long-term issuer credit rating of “bb+” (Fair) of New Zealand’s Provident Insurance Corporation Ltd (PICL).
AM Best in a statement said the credit ratings reflect PICL’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 (ERM).
The positive outlooks reflect an improving trend in PICL’s balance sheet fundamentals, including risk-adjusted capitalisation and the size of the company’s absolute capital base.
“These factors, coupled with AM Best’s expectation of sustainable business growth and robust operating results over the medium term, could lead to positive rating actions,” it said.
The company’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation, which is at a strong level in the fiscal year 2022, as measured by Best’s Capital Adequacy Ratio.
The credit rating agency expects PICL’s risk-adjusted capitalisation to remain at least a strong level over the medium term, supported by positive retained earnings and a conservative investment strategy.
Offsetting balance sheet factors include exposure to long-duration policies that increase reserving risks, and a dividend policy anticipated to distribute the majority of profits.
AM Best assessed PICL’s business profile as limited. This reflects the company’s relatively modest scale of operations and limited geographical diversification, with all businesses emanating from New Zealand.
It also rated PICL’s ERM as appropriate, given the size and the complexity of its operations and views the successful execution of the company’s underwriting strategy and planned infrastructure investment to be a key risk exposure.
Over the medium term, PICL’s risk management capabilities are expected to continue to develop in order to support increasing operational scale and widening product offerings.
-- BERNAMA
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