SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Police Health Plan Limited (PHP) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PHP’s strong risk-adjusted capitalization, favorable operating performance and good business profile. PHP’s close integration with its parent and related companies has enabled the company to sustain a low expense ratio, benefiting from shared overhead costs, as well as the ability to distribute health insurance products through its group network.
PHP’s strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is due to its moderate underwriting leverage, high capital quality and favorable liquidity position. The company also has a good performance track record, with an average operating ratio of approximately 88% on a five-year basis. The above-mentioned expense advantage has allowed PHP to offer its members more competitive health coverage and premiums.
Offsetting rating factors include a higher claims ratio being budgeted over the next few years. As a strongly capitalized non-profit insurer, PHP has started to hold premiums constant while increasing the benefits it provides. This has led to a thin profit margin. However, A.M. Best expects that PHP would be able to raise capital quickly by adjusting the fortnightly premiums within short notice following an unanticipated loss.
While positive rating actions are unlikely, negative rating actions may occur if there is a major underwriting deficit or significant deterioration in risk-adjusted capitalization.
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.
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