SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” of Quest Insurance Group Limited (Quest) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Quest’s balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings factor in a neutral impact from the company’s ultimate majority ownership by Federal Pacific Group Limited.
Quest’s balance sheet strength is underpinned by its risk-adjusted capitalization, which AM Best expects to remain at least at a very strong level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by internal generation of positive earnings. A partially offsetting balance sheet factor is the company’s small absolute capital base, which exposes risk-adjusted capitalization to volatility in stressed scenarios. In addition, the company’s investment portfolio includes investments with low liquidity.
The company has a track record of adequate operating performance, as evidenced by a five-year average return on equity ratio of 8% (fiscal years 2014 to 2018). AM Best expects prospective performance to remain supportive of the adequate assessment over the near term, although potential volatility could follow the company’s rapid business growth and risk profile changes in 2018 and 2019.
Quest’s business profile is assessed as limited, reflecting its small market presence and relatively concentrated niche product offering. A new partnership with Janssen Insurance commencing in 2017 has increased the company’s scale of operation significantly and reduced its dependence on affiliates for product distribution.
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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