AM BEST AFFIRMS NEW ZEALAND MEDICAL INDEMNITY INSURANCE CREDIT RATINGS

KUALA LUMPUR, May 6 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of B+ (Good) and the long-term issuer credit rating of “bbb-” (Good) of New Zealand Medical Indemnity Insurance Limited (NZMII).

The outlook of these credit ratings (ratings) is stable, reflecting NZMII’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

NZMII’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level as of March 31, 2023 (fiscal year-end 2023), as measured by Best’s Capital Adequacy Ratio.

AM Best in a statement said prospective risk-adjusted capitalisation remains sensitive to the pace of the company’s business growth and the size of future dividend distributions given its modest capital base.

The company’s balance sheet strength is supported by its conservative investment portfolio, consisting mainly of cash and fixed-income securities, while its operating performance is assessed as adequate, demonstrated by a five-year average return-on-equity ratio of 14 per cent (fiscal years 2019-2023).

Its overall operating performance has improved significantly since fiscal year 2021, as a result of remedial actions taken by management, including premium rate adjustments and shifting the composition of the investment portfolio to reduce investment risk.

Although prospective underwriting results remain sensitive to increased claims and elevated expenses, operating profitability is expected to remain positive and supportive of the adequate assessment.

The credit rating agency assesses NZMII’s business profile as limited given its position as a small and niche insurer in New Zealand providing medical indemnity insurance to medical practitioners and health professionals.

As a monoline insurer with operations in a single country, AM Best views the company as having limited geographic and product diversification, in which access to new business is supported by NZMII’s affiliation with the New Zealand Resident Doctors’ Association.

-- BERNAMA