AM Best affirms Momentum Life Credit Ratings as Good

KUALA LUMPUR, March 8 -- AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of ‘bbb’ of Momentum Life Limited (Momentum Life) New Zealand.

With a stable outlook of these Credit Ratings (ratings), the ratings reflect Momentum Life’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business pro􀂦le and appropriate enterprise risk management.

In addition, the ratings factor in no rating lift or drag from the company’s 100 per cent ownership by BlueInc Group Pty Limited.

The global credit rating agency, AM Best expects Momentum Life’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, to remain at the strongest level over the medium term, according to a statement.

Despite forecasted underwriting growth during the company’s start-up phase driving increased capital requirements, AM Best expects available capital to remain sufficient to offset this planned business expansion over the medium term.

AM Best considers Momentum Life’s operating performance to be adequate. The company has reported operating profits in fiscal years 2019 and 2020, with an average return-on-equity ratio of 8.6 per cent over this period.

As a start-up insurer, Momentum Life’s earnings are impacted partially by a high expense ratio, given its small premium base.

The company’s operating performance todate has been supported by the favourable run-off of trail commission assets arising from insurance distribution operations prior to 2018, and reinsurance commission income, which have both partially offset outward acquisition costs during the company’s initial growth phase.

Prospectively, AM Best expects the company to record positive earnings over the medium term, as it grows in scale and executes its strategic business plan.

-- BERNAMA