HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of DPL Insurance Limited (DPL) (New Zealand). The outlook for both ratings is stable.
The ratings reflect DPL's adequate capitalization and continued initiatives to improve its operating performance.
Based on Best's Capital Adequacy Ratio (BCAR), DPL's capitalization is at an adequate level to support its assets and underwriting risk. In addition, the company recently diversified into the motor vehicle insurance segment, which could potentially improve the level of its overall earnings.
Partially offsetting these positive rating factors are the size of DPL's in-force portfolio, as well as its business expansion risk.
DPL has a small in-force portfolio, which generated premium revenue of approximately NZD 3 million in fiscal year 2013-2014 (unaudited). Based on the company’s business scale and capital size, rapid expansion into a different segment in which the company has a limited track record exposes it to heightened risks in pricing and reserving.
While sales of motor vehicle insurance policies under the “Mainstream” brand have shown a positive growth trend since its launch, negative rating movements could occur if DPL cannot continue to grow its new product lines profitably in line with the business plan provided to A.M. Best, or if there is a significant deterioration in DPL's risk-adjusted capitalization due to underwriting losses or asset impairments.
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.
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