Ratings agency A.M. Best has affirmed the “A” (Excellent) financial strength rating and the “a” long-term issuer credit rating of
FMG Insurance Limited. The outlook for these credit ratings (ratings) is stable.
In a statement, A.M. Best said the ratings reflect FMG’s balance sheet strength, which the ratings agency categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect FMG’s modest underwriting leverage, prudent capital management policy and direct distribution network capability.
The insurer has a well-established profile within New Zealand’s farming and rural sector; has its insured risks spread widely across the country; has less geographic risk concentration proportionally relative to its peers; and has been able to maintain adequate catastrophe protection, while keeping reinsurance costs affordable through a robust reinsurance program, A.M. Best said.
“Partially offsetting rating factors are FMG’s variable operating performance and a deteriorating trend in its underwriting performance in recent years,” it noted.
“Operating results in fiscal years 2016 and 2017, in particular, took a downturn, primarily due to claims costs from multiple weather events along with the impact of the November 2016 Kaikoura earthquake.
“In response, the company has implemented price increases across business lines, and prospective underwriting results are expected to improve.”
Negative rating actions could occur if there is a significant deterioration in FMG’s risk-adjusted capitalization as a result of multiple catastrophe event losses, the agency added.
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