A specialist niche market insurer that offers professional indemnity and general/public liability insurance to the carpet cleaning, agricultural, urban pest, weed control, and building inspection industries has had its credit ratings affirmed by A.M. Best.
Pacific International Insurance Pty Limited maintained its “B++” (Good) Financial Strength Rating and “bbb” Long-Term Issuer Credit Rating, the outlook of which is stable.
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The global ratings agency said Pacific’s credit ratings reflect its “strong risk-adjusted capitalization, positive operating performance, and high-quality investment portfolio” and acknowledges the insurer’s expertise in Australia’s pest control and building inspection market.
Offsetting the company’s rating factors, according to the report, are its stagnant growth rates and weak underwriting profitability, as it contends with the aggressive pricing of its competitors and its lack of scale, resulting in a high expense ratio and combined ratio.
Its small scale also makes the insurer’s underwriting results highly sensitive to a few larger claims or one-off expenses, a weakness partially offset by Pacific’s low underwriting leverage and a substantial buffer from a stable stream of investment income, A.M. Best said.
The company may face negative rating actions if there is a significant deterioration in its risk-adjusted capitalization due to unexpected capital repatriation, or if its profitability declines below the rating agency’s expectation due to competitive pressures or multiple large claims.
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