AM Best Revises Outlooks to Negative for Health Services Welfare Society Limited

SINGAPORE–()–AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Health Services Welfare Society Limited (New Zealand), trading as Accuro Health Insurance (Accuro).

The Credit Ratings (ratings) reflect Accuro’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The revision of the outlooks to negative reflects AM Best’s expectation of increased pressure on Accuro’s balance sheet strength fundamentals. Over the medium term, a substantial technology investment is expected to drive a notable deterioration in Accuro’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). Whilst the infrastructure investment is considered important to Accuro’s long-term strategy and competitive positioning, the costs associated with the technology upgrade are expected to be significant and drive an increase in intangible assets on the company’s balance sheet.

Other balance sheet considerations include the company’s relatively high underwriting leverage compared with other New Zealand health insurers and its small absolute capital base, which increase the sensitivity of capital adequacy to stressed scenarios and/or fluctuations in performance. During fiscal year 2020, the company’s exposure to investment risk increased as a result of shifting part of its portfolio from cash and short-term deposits to fixed income securities, equities and listed property holdings. Despite this change in investment strategy, the company’s bond holdings are typically of high credit quality and the overall investment portfolio continues to be viewed as low-to-moderate risk. As a member-owned organisation, AM Best considers Accuro’s financial flexibility to be limited.

AM Best views Accuro’s operating performance to be adequate with a five-year average operating ratio of 97.9% (fiscal years 2016-2020), albeit with a moderate level of volatility over this period. The company’s claims volume declined in fiscal year 2020 due to the deferral of elective surgeries amid the COVID-19 pandemic, which supported an improvement in the company’s overall operating result for the year. However, a subsequent catch-up in claims activity is anticipated in fiscal year 2021. Prospectively, AM Best expects Accuro to maintain adequate operating results, supported by a robust pricing strategy and positive investment returns.

Accuro is a not-for-profit organisation that provides health insurance in New Zealand. The company’s business profile assessment of limited reflects its relatively small-scale operations, and limited product and geographical diversification in New Zealand. Accuro is a small insurer in New Zealand’s health insurance industry, with a market share of less than 2% based on gross premiums in 2020. Despite competitive market conditions, the company’s membership has grown over the past five years due to the development of new products, including various product enhancements bolstering the value proposition.

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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