SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of The Education Benevolent Society Incorporated (EBS) (New Zealand). The outlook for both ratings is stable.
The ratings primarily reflect EBS’ strong risk-adjusted capitalization and consistently favorable operating results.
EBS’ risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is deemed to be strong and can be characterized by low underwriting leverage, strong liquidity and high quality investments. Despite the high expense ratio and underwriting losses in recent years, the company has been fully subsidized by a stable stream of other income, principally referral commissions. As a result, operating results have remained consistently positive over the past five-year period.
The positive rating factors are partially offset by EBS’ small capital base and declining premium trend, principally due to membership trends.
Factors that could lead to negative rating actions for EBS include a weakened competitive market position in its niche educational union sector or a significant deterioration in the operating results.
The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
• Risk Management and the Rating Process for Insurance Companies
• Underwriting Universal BCAR
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.
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