AM Best Affirms Credit Ratings of Union Medical Benefits Society Limited

SINGAPORE–()–AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Union Medical Benefits Society Limited (UniMed) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect UniMed’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

UniMed’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level in fiscal year 2020. This reflects the company’s low underwriting leverage and prudent investment strategy. In addition, AM Best views the company as having a favourable liquidity position. As a member-owned organisation, AM Best considers UniMed’s financial flexibility to be limited. However, this is partially mitigated by the company’s prudent approach to capital management and its track record of robust internal capital generation.

AM Best views UniMed’s operating performance as strong, with a five-year average return-on-equity ratio of 8.9% and operating ratio of 89.4% (fiscal years 2016-2020), albeit with a moderate level of volatility over this period. The company’s overall operating results reflect a combination of generally strong underwriting performance and robust investment returns. UniMed benefits from an efficient cost structure that supports a low operating expense ratio, with the company’s loss ratio remaining the key driver of underwriting performance. In fiscal year 2020, the company’s claims volume declined due to the deferral of elective surgeries amid the COVID-19 pandemic, with a subsequent catch-up in this activity occurring in fiscal year 2021. Prospectively, AM Best expects UniMed to maintain strong operating results, supported by a robust pricing strategy, positive investment returns and its ability to adjust premium rates rapidly in response to any deterioration in claims experience.

AM Best considers UniMed’s bus iness profile as limited, largely reflecting the company’s small-scale operations and its limited product and geographic diversification in New Zealand. The company is a not-for-profit organisation that provides health insurance with a market share of 4% in New Zealand’s health insurance industry, based on 2020 gross premiums written. In addition, AM Best views the company as having a concentration toward a small number of large group medical accounts, which increases the susceptibility of overall earnings to changes in the performance of these key accounts.

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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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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