SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Beneficial Insurance Limited (Beneficial) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Beneficial’s balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Beneficial’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This reflects Beneficial’s moderate net underwriting leverage and conservative investment strategy. Prospectively, the company’s risk-adjusted capitalisation is expected to remain at the strongest level, with sufficient earnings retention over the medium term to support its planned business initiatives. Partially offsetting balance sheet factors include the company’s small absolute capital base, which increases the sensitivity of capital adequacy to stress scenarios, and to changes in future performance. In addition, AM Best views the company to have limited financial flexibility, with a reliance on its privately held holding company, Beneficial Holdings Limited, for financial support, if required.
Beneficial has a track record of strong operating performance, as evidenced by a five-year weighted average return-on-equity ratio of 38.3% (fiscal years 2018-2022). The company’s overall profitability continues to be driven by its favourable underwriting performance and supplemented by positive investment returns. Prospectively, AM Best expects Beneficial to maintain strong operating performance over the medium term, benefiting from steady revenue growth and continued low loss ratios, coupled with positive investment income.
AM Best views Beneficial’s business profile to be limited, largely reflecting the company’s small-scale operations and its limited product and geographic diversification in New Zealand. The company is a niche insurer that focuses on pet insurance in New Zealand, with a small overall market share in the domestic general insurance industry. Prospectively, AM Best expects the company’s growth strategy to benefit from continued development of its pet insurance business, as well as its existing non-pet insurance related product offerings and new product initiatives.
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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