SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Co-operative Life Limited (Co-op Life) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Co-op Life’s balance sheet strength, which AM Best categorizes as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Co-op Life’s balance sheet strength is underpinned by risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is categorized as strongest. This reflects the company’s low underwriting leverage, moderate reliance on third-party reinsurance and conservative investment strategy. Offsetting balance sheet factors include the company’s small absolute capital base, which increases its sensitivity to shock events, as well as to changes in future performance, dividend payouts and intangible assets.
Co-op Life has a track record of strong operating performance, with the company having reported a five-year average return on equity of 30% (fiscal-years 2015-2019). Profitability continues to be driven mainly by the robust underwriting performance of its in-force life business, coupled with low single-digit but stable investment returns. Prospectively, AM Best expects favorable claims experience to drive continued strong operating performance.
Co-op Life is a small-sized life insurer focused mainly on term life insurance and loan protection insurance products in New Zealand. The company’s limited business profile assessment is largely a result of its small-scale operations, as well as limited product and geographical diversification in New Zealand. The company has a market share of less than 1% in New Zealand’s life insurance industry, based on 2019 gross written premiums. Although Co-op Life benefits from distributing its products through its parent’s banking network, the company has a low penetration rate among the bank’s customer base.
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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