AM Best: Provident Insurance Corporation Limited Credit Ratings affirmed

KUALA LUMPUR, Dec 13 -- AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of ‘bb+’ (Fair) of Provident Insurance Corporation Limited (PICL) New Zealand. The outlook of these Credit Ratings (ratings) is stable.

According to a statement, the ratings reflect PICL’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 (ERM).

PICL’s balance sheet strength assessment reflects its risk-adjusted capitalisation, which was at the strong level as of fiscal year-end 2021, as measured by Best’s Capital Adequacy Ratio.

Despite elevated planned underwriting growth over the medium term, AM Best expects PICL’s risk-adjusted capitalisation to be maintained at least at an adequate level, supported by internal capital generation.

Other balance sheet factors include the company’s conservative investment strategy and prudent reserving approach, with a notable buffer in held reserves above regulatory requirements.

Global credit rating agency, AM Best views PICL’s operating performance as adequate. The company reported a five-year average return-on-equity ratio of 10.7 per cent (fiscal years 2017-2021), albeit with heightened volatility over this period.

Following weakened underwriting performance in fiscal 2020 due to worse-than-expected loss experience of the company’s core insurance products, PICL has executed several mitigating actions, including targeted premium rate adjustments and strengthening of underwriting controls.

AM Best views PICL’s business profile as limited, reflecting the company’s relatively modest scale of operations and limited geographical diversification, with all business emanating from New Zealand.

AM Best assesses PICL’s ERM as appropriate, given the size and the complexity of its operations. AM Best views the successful execution of the company’s underwriting growth plan to be a key risk exposure.

For more information, visit www.ambest.com.

-- BERNAMA