SINGAPORE, July 28 (Bernama-BUSINESS WIRE) -- A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Provident Insurance Corporation Limited (PICL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PICL’s adequate risk-adjusted capitalization, prudent reserving and conservative investment portfolio. Moreover, despite the company’s start-up nature, its operating performance and claims experience during its first four years of operations have been largely consistent with initial projections.
Partially offsetting these positive rating factors are the company’s increasing underwriting leverage and a high expense ratio. Due to the delayed premium recognition of its core motor warranty products, growth in earned premium and underwriting profits tend to lag behind growth in incurred expenses. Hence, increased underwriting leverage from above-target premium growth over the short term could result in additional pressure on the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).
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