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 Kiwi Insurance Limited (Kiwi) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Kiwi’s strong risk-adjusted capitalization, favorable operating performance and conservative investment portfolio. As an affiliated company of New Zealand Post Limited (NZPL) and Kiwibank, Kiwi is able to benefit from cross-selling opportunities, low acquisition costs and shared resources within the group.
Offsetting rating factors are Kiwi’s relatively small in-force portfolio and low penetration rate among the bank’s customer base. Despite its overall sound profitability, underwriting results historically have been subdued and tracked behind its local bancassurance peers. This is due to significant expenses and capital expenditures being incurred ahead of realized sales. Nonetheless, due to favorable growth in premium revenue over the past five years, A.M. Best expects the operation to begin reflecting economies of scale.
The company has a short history of operating as a self-sufficient insurer. It transitioned from an outsourced model to an in-house manufacturing model in 2011 and its scale of operations has remained small. Future success of the operation will depend on how well it can leverage its affiliates’ distribution platforms and customer bases to generate more business volume.
Positive rating actions are unlikely in the near term. Negative rating actions could occur if there is a material decline in the company’s risk-adjusted capitalization or significant deterioration in its operating performance. Negative rating pressure also could occur if there is any adverse development in the financial strength of NZPL and its sister company, Kiwibank.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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