AM Best Comments on Credit Ratings of The Hollard Insurance Company Pty Ltd

SINGAPORE--(BUSINESS WIRE)--AM Best has commented that the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of The Hollard Insurance Company Pty Ltd (HIC) (Australia) remain unchanged following its intermediate parent, Hollard Holdings Australia Pty Ltd (HHA), having acquired Commonwealth Insurance Limited (CIL). The outlook of these Credit Ratings (ratings) is stable.

On 30 September 2022, HHA completed the acquisition of CIL, subsequently renamed to Hollard Insurance Partners Limited (HIP) from Commonwealth Bank Ltd (CBA). The acquisition, previously announced in June 2021, also includes an exclusive 15-year strategic alliance between CBA and HHA to distribute home and motor products to CBA’s customers.

Following the recent transaction, HHA has become the intermediate non-operating holding company of HIC and HIP, and consolidates the risk-bearing operations of both entities. HIC’s rating fundamentals continue to incorporate a neutral holding company impact from HHA. Pro-forma consolidated risk-adjusted capitalisation at HHA, as measured by Best’s Capital Adequacy Ratio (BCAR), is expected to decline following the acquisition of HIP, as a result of growth in combined underwriting risks and due to an increase in intangible assets. However, over the medium term, AM Best expects HHA’s risk-adjusted capitalisation to be managed to at least a very strong level. Existing and future debt obligations at intermediate and ultimate holding company levels also are not expected to lead to any undue pressure for capital extraction or dividends from HIC, HIP or HHA.

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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