The ratings are supported by Chubb Life NZ's balance sheet strength, assessed as “very strong” by AM Best, along with its satisfactory operating performance, neutral business profile, and effective enterprise risk management. Additionally, the ratings take into account the rating enhancement from the company's parent, Chubb Limited (Chubb).
The assessment of Chubb Life NZ's balance sheet strength is based on its strong risk-adjusted capitalisation, measured by Best's Capital Adequacy Ratio (BCAR). The company maintains a conservative investment allocation and moderate underwriting leverage, contributing to its solid capital position.
Chubb Life NZ also exceeds the minimum regulatory requirements for solvency, ensuring a healthy financial buffer.
However, the implementation of the Interim Solvency Standard in 2023 will introduce new challenges, prompting the company to adjust its surplus targets and investment strategies to meet the updated capital requirements.
AM Best considers Chubb Life NZ's operating performance as satisfactory, with a five-year average return-on-equity ratio of 1.3% (fiscal years 2018-2022). Despite challenges from interest rate fluctuations impacting the investment portfolio, the company is expected to maintain steady revenue growth through effective pricing strategies.
Chubb Life NZ holds a neutral business profile and ranks among the top life insurance companies in New Zealand in terms of gross earned premiums. Its product offerings encompass various insurance types, including term life, disability income, trauma, and funeral insurance.
The company benefits from a diverse distribution approach, with a significant advantage stemming from its bancassurance distribution agreement with ANZ Bank New Zealand Limited, as well as its adviser channel.
The rating enhancement from Chubb, its parent company, reflects the integration and support provided by the group. Chubb has demonstrated its commitment to Chubb Life NZ by offering reinsurance protection through its affiliate and actively overseeing the company's strategic direction. Although Chubb Life NZ represents a small portion of the Chubb group's overall revenues and earnings, its acquisition has expanded the group's presence in New Zealand.
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