AM Best Affirms Credit Ratings of Consumer Insurance Services Limited

SINGAPORE–()–AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Consumer Insurance Services Limited (CISL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CISL’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, very limited business profile and appropriate enterprise risk management (ERM). The ratings also factor in a neutral impact from the company’s ultimate ownership by humm group limited.

CISL’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite CISL’s run-off status, AM Best expects the company to maintain its local regulatory solvency position at an appropriate level throughout the run-off period term, supported by continued adequate internal capital generation. In addition, the company’s investment strategy is expected to remain conservative, with invested assets consisting solely of cash and short-term deposits. An offsetting balance sheet factor is CISL’s very small absolute capital base, which increases the susceptibility of capital adequacy to volatility under stressed scenarios.

AM Best considers CISL’s operating performance to be adequate. The company reported a five-year average return-on-equity ratio of 30% (fiscal years 2016 to 2020), albeit with a moderate level of volatility over this period. The company’s operating results over the past five years have been driven by favourable claims experience from its sole product offering of credit card repayment protection insurance. However, following the implementation of product coverage enhancements for existing policyholders in September 2019, CISL’s loss ratio trended upward in fiscal year 2020. Prospectively, AM Best expects CISL’s underwriting profitability to remain positive, albeit exposed to increased volatility due to the company’s declining scale of operation and premium base. AM Best expects CISL’s underwriting and operating performance to remain at an adequate level over the run-off period.

AM Best views CISL’s business profile as very limited, reflecting its small scale of operations and niche position as a provider of credit card repayment protection for cardholder customers of its intermediate parent, FlexiGroup (New Zealand) Limited. As the company entered into run-off following the decision to cease writing new business from November 2018 and renewal business from April 2019, its business profile has diminished in recent years. AM Best expects CISL’s existing policyholder obligations to run off before the end of fiscal year 2024.

AM Best views CISL’s ERM framework as appropriate given the current size and complexity of its operations. AM Best continues to monitor the impact of potential regulatory challenges in relation to the conduct and culture review by New Zealand regulatory bodies, as any resulting increase in regulatory or operational risk could drive a mismatch between CISL’s risk management profile and capability.

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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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