Global ratings agency AM Best has affirmed the financial strength rating of B+++ (Good) and the issuer credit rating of “bbb” of Provident Insurance Corporation Limited (PICL) (New Zealand).
The outlook for each rating remains stable, the agency revealed.
“The ratings affirmations reflect PICL’s adequate risk-adjusted capitalisation, resulting from the company’s moderate underwriting leverage and conservative investments,” AM Best said.
“In addition, actual claims experience during the company’s first three years of operation has been largely consistent with its initial projections.”
The agency pointed to Provident’s high expense ratio, stemming from its small premium base to cover its operating expenditures, which it said partially offset the positive rating factors.
Other offsetting rating factors included the company’s narrow product focus and increasing underwriting leverage.
AM Best added that while positive rating actions were unlikely in the near term, a material deviation from the company’s planned underwriting performance may trigger negative rating actions.
“Furthermore, the ratings may experience downward pressure if there is a material increase in asset risk that causes a significant decline in the company’s risk-adjusted capitalisation.”
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