SINGAPORE--(BUSINESS WIRE)--A.M. Best has revised the outlooks to positive from stable and affirmed the financial strength rating of B (Fair) and the issuer credit rating of "bb+" of Health Services Welfare Society Limited (New Zealand), trading as Accuro Health Insurance (Accuro).
The outlook revisions to positive reflect Accuro’s adequate risk-adjusted capitalization and favorable trend in underwriting performance over the past five years. The underwriting gains were achieved through continued pricing adjustments, a reduction in its operating expense ratio and the favorable experience of its current product offerings. As a result, the company was able to report positive earnings in fiscal years 2014 and 2015, in contrast to the operating losses reported in earlier part of that five-year period. The ratings also reflect Accuro’s conservative investment portfolio and good business profile in New Zealand’s retail medical insurance sector.
These positive factors are partially offset by the company’s projected lower profit margin and its relatively high underwriting leverage.
As a not-for-profit insurer, Accuro is not expected to generate significant surplus on an ongoing basis, resulting in less of a cushion for the company to absorb unexpected losses. Moreover, net premium earned remains in excess of three times capital, which leaves the level of capitalization relatively more sensitive to higher-than-expected claims severity or frequency.
Upward rating movement could occur if the company continues to generate positive operating results while maintaining an adequate risk-adjusted capitalization. Negative rating actions may occur if the company’s risk-adjusted capitalization significantly deteriorates due to operating losses arising from adverse claims experience.
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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