SINGAPORE--(BUSINESS WIRE)--A.M. Best has upgraded the Financial Strength Rating to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating to “bbb” from “bbb-” of Beneficial Insurance Limited (BIL) (New Zealand). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect BIL’s adequate balance sheet strength, strong operating performance and low product risk profile.
The rating actions recognize that BIL has significantly reduced its exposure to illiquid assets while improving its underwriting results over the past five years. The exposure to illiquid assets relative to capital size has been reduced to 28% in fiscal year 2017 from 97% in fiscal year 2013, which has resulted in a more favorable liquidity position and higher quality of capital. Despite the ongoing exposure to illiquid assets, the company’s underwriting leverage remains conservative, and BIL continues to focus on a high-frequency, low-severity line of business. In addition, the company has a strong performance track record, with a five-year average operating ratio of approximately 86%. This is underpinned by robust earnings derived from its in-force business and stable investment returns.
Major offsetting rating factors are BIL’s modest capital size and its limited business profile.
BIL is well-positioned at its current rating level. While positive rating actions are unlikely, the ratings could be downgraded if there are material deviations from underwriting profitability targets or substantial asset impairment.
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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