AM BEST: FMG INSURANCE CREDIT RATINGS AFFIRMED

KUALA LUMPUR, March 3 (Bernama) -- Global credit rating agency, AM Best has affirmed New Zealand’s FMG Insurance Limited (FMGIL) Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent).

AM Best in a statement said the Credit Ratings (ratings), which have a stable outlook reflected FMGIL’s balance sheet strength, which AM Best assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

In addition, the ratings factor in a neutral holding company impact from the company’s 100 per cent ownership by Farmers’ Mutual Group (FMG).

FMGIL’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation being at the strongest level at fiscal year ended March 31, 2022, as measured by Best’s Capital Adequacy Ratio.

Prospectively, AM Best expects the company’s risk-adjusted capitalisation to remain at this level over the medium term. FMGIL is considered to have a comprehensive reinsurance programme that provides protection against high-severity modelled catastrophe events in New Zealand.

AM Best viewed the company’s investment portfolio to be of moderate risk with a focus on cash and high-quality fixed-income securities, albeit with some exposure to equities.

The rating agency assessed FMGIL’s operating performance as adequate, with a five-year average return-on-equity ratio of 9.6 per cent (fiscal years 2018-2022). Over this same period, the company has recorded robust underwriting profits, aided in part by a lower-than-expected frequency for motor claims during the COVID-19 pandemic.

For fiscal year 2023, AM Best expects the company to report a deterioration in underwriting and operating results, due to a combination of claims cost inflation and the impact of several large weather events, including flooding and cyclone events in New Zealand in January and February this year.

FMGIL has a strong direct distribution business model that is built on long-standing customer relationships and supported through its ownership by FMG, which has a long history and strong brand recognition in New Zealand’s rural sector.

-- BERNAMA