KUALA LUMPUR, Oct 2 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of New Zealand’s Union Medical Benefits Society Limited (UniMed).
The credit ratings (ratings), which have a stable outlook, reflected UniMed’s balance sheet strength, which AM Best assessed as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
UniMed’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which was at the strongest level for fiscal year ended June 30, 2022 reflecting its low underwriting leverage and moderate risk investment strategy.
AM Best in a statement said the company’s regulatory solvency position was substantially higher than the regulatory minimum requirement and its own internal minimum threshold.
As a member-owned organisation, AM Best considers UniMed’s financial flexibility to be limited. However, this is mitigated partially by the company’s prudent approach to capital management and its track record of robust internal capital generation.
The rating agency views UniMed’s operating performance as strong, with a five-year average return-on-equity ratio of 6.0 per cent and a combined ratio of 93.4 per cent (fiscal years 2018-2022).
In recent years, the company’s overall operating results experienced volatility as a result of COVID19 and volatile investment markets.
UniMed benefits from its ability to adjust premium rates rapidly in response to any claims deterioration, as well as an efficient cost structure that allows it to offer competitive health coverage and premiums to its members.
Prospectively, AM Best expects the company’s operating performance to remain robust although investment in marketing activities and technology infrastructure is expected to drive an increase in its expense ratio over the medium term.
-- BERNAMA
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