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 BNZ Life Insurance Limited (BNZ Life) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect BNZ Life’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
BNZ Life’s balance sheet strength is supported by risk-adjusted capitalization that is maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite a high dividend payout ratio, BNZ Life has a favorable level of liquid assets to meet its contractual obligations, supplemented by positive operating cash flows. The company’s regulatory solvency margin is modest compared with other New Zealand life insurers.
BNZ Life has a track record of robust earnings derived from in-force business and stable investment income. Its five-year average return on premium and return on equity each exceed 30%. The company has a favorable claims experience, and a lower commission and expense ratio compared with its peers. A.M. Best expects BNZ Life’s prospective operating performance to be strong with low volatility, supported by steady revenue growth, adequate product pricing and a stable stream of investment income.
BNZ Life is a small to medium-sized insurer in the New Zealand life insurance industry that writes mainly term life, income protection, permanent disability and terminal illness insurance. The company gains a competitive advantage by distributing its products through an affiliated bancassurance channel. As an affiliated company of Bank of New Zealand Limited, BNZ Life has low distribution costs, and benefits from a banking network with branches nationwide.
BNZ Life has a developed risk management program based on its current size and complexity. The company has demonstrated an overall satisfactory ability to address most of its risks, primarily through adequate pricing and holding highly liquid assets in its investment portfolio. Therefore, A.M. Best considers BNZ Life’s risk management capabilities to be aligned appropriately with its risk profile.
BNZ Life is well-positioned at its current ratings level. Negative rating pressure may occur if capitalization erodes significantly below its target surplus capital due to factors such as higher-than-expected dividend payouts or material deterioration in operating performance.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.