SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of The Education Benevolent Society Incorporated (EBS) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect EBS’ very strong risk-adjusted capitalization and low product risk profile.
EBS’ very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is reflective mainly of its low underwriting leverage, strong capital quality and favorable liquidity position. Although the company has reported a relatively high expense ratio and underwriting losses in recent years, these underwriting losses largely have been subsidized by a stable stream of other income, principally referral commissions. As a result, the operating ratio on a five-year basis has averaged approximately 90%.
Partially offsetting these strengths are EBS’ low market penetration and small premium revenue. With a premium size of about NZD 4 million, the company’s expense ratio is far more sensitive to one-off expenses than insurers with larger premium sizes.
While EBS is well-positioned at its current rating level, factors that could lead to negative rating actions include a weakened competitive market position in its niche educational union sector or significant deterioration in its operating results.
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 A.M. 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 A.M. 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.