The ratings reflect BIL’s balance sheet strength, which AM Best categorizes as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
BIL’s balance sheet strength is underpinned by risk-adjusted capitalization that is categorized as strongest, as measured by Best’s Capital Adequacy Ratio (BCAR). An offsetting balance sheet factor is the company’s small absolute capital base, which increases the sensitivity of its capital position to shock events and adverse changes in prospective performance, growth or dividend payouts. In addition, AM Best views the company to have limited financial flexibility, with a dependence on its single ultimate shareholder for financial support, if required. Over the medium term, AM Best expects the company’s strong internal capital generation will enable it to maintain its risk-adjusted capitalization at the strongest level.
BIL has a track record of strong operating performance, as demonstrated by a five-year average return on equity ratio of 25.2% (fiscal-years 2015-2019). Profitability over this period has been driven by favorable underwriting performance and stable investment returns. Prospectively, AM Best expects strong underwriting performance by BIL over the medium term, supported by continued low loss ratios and from gradually improving expense ratios, as the company executes its business growth plan and benefits from economies of scale.
BIL is a niche insurer that focuses on pet insurance in New Zealand. The company’s limited business profile assessment is largely a result of its small-scale operations, as well as product and geographical concentration in New Zealand. The company’s motor breakdown insurance product, which was launched in 2016, is forecast to grow in significance over the long term, but presently remains a small component of the company’s underwriting portfolio.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry. Visit www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Contact
Sin Yee Chuah
Financial Analyst
+65 6303 5022
sinyee.chuah@ambest.com
Myles Gould
Director, Analytics
+65 6303 5020
myles.gould@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com
Source : AM Best
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