HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Product Care (NZ) Limited (PCL) (New Zealand). The outlook for both ratings is stable.
The rating affirmations for PCL reflect its adequate risk-adjusted capitalization, prospective favorable underwriting results and conservative investment strategy.
PCL's risk-adjusted capitalization, as measured by the Best's Capital Adequacy Ratio, is adequate for its rating level, largely due to the reinsurance protection received from highly rated reinsurers. Investments solely in low risk assets such as cash and term deposits also are supportive of its ratings. Prospective favorable underwriting results are driven primarily by management initiatives in prior years, including premium rate adjustments and competitive tendering of repairs. This has translated into an improvement in loss ratios for the New Zealand business that was transferred from an affiliate of PCL.
These positive rating factors are offset by the company’s marginal capital over the regulatory minimum level and its high reliance on one external customer to provide all premium revenues on an ongoing basis.
The company is well positioned for its current ratings. Downward pressure on the ratings would occur if the regulatory minimum capital requirement is breached, or if the company's loss ratio exceeds its forecast provided to A.M. Best.
The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.