SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Youi NZ Pty Limited (Youi NZ) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Youi NZ’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
Youi NZ’s balance sheet strength assessment is very strong, reflective of its low underwriting leverage, prudent reinsurance program and highly liquid investment portfolio. Given the volume of risks that Youi NZ currently writes and retains, the capital required to support the company’s book of business is relatively modest. In addition, Youi NZ continues to invest its technical and shareholders’ funds conservatively, with cash and term deposits making up the entire investment portfolio. Altogether, these factors contribute to the company’s very strong balance sheet assessment.
Consistent with Youi NZ’s indicated marketing plan and strategy during its start-up phase, A.M. Best expects underwriting results to exhibit a pattern of comparatively high operating expense ratios. This is due mainly to the company having a small premium base from which to cover its operating expenses, resulting in negative underwriting results. Prospectively, as Youi NZ continues to mature, A.M. Best expects its operating results to turn positive and gradually improve over time.
Youi NZ is a direct insurer focused on short-tail personal lines products in New Zealand, including car, home, motorcycle, trailer and watercraft insurance. All business is generated through a direct distribution model utilizing the internet combined with call center operations. Claims experience has shown a steady improvement, as the business continues to mature. Nevertheless, Youi NZ’s current competitive market position and geographical concentration have constrained its business profile assessment.
The stable outlooks reflect A.M. Best’s expectation that Youi NZ will continue to improve its operating and underwriting results, supported by stable claims ratios and an expense ratio that should decline over time. A material decline in Youi NZ’s risk-adjusted capitalization, due to a failure to meet its projected underwriting performance, may trigger negative rating actions.
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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