THE HOLLARD INSURANCE COMPANY PTY LTD CREDIT RATINGS AFFIRMED - AM BEST

KUALA LUMPUR, March 4 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ (Excellent) of The Hollard Insurance Company Pty Ltd (HIC) Australia.

The outlook of these Credit Ratings (ratings) is stable, according to a statement.

The ratings reflect HIC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The company’s balance sheet strength assessment is underpinned by its unconsolidated risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which was at the strongest level in fiscal year 2021, and is expected to remain at least at the very strong level prospectively.

Since fiscal year 2020, the company has set aside provisions for potential COVID-19 related claims arising predominantly from business interruption coverages in Australia.

This provisioning increased significantly during fiscal year 2021, whilst remaining subject to a high level of uncertainty given the ongoing legal proceedings surrounding these policy coverages in Australia.

Other balance sheet strength considerations include the company’s moderate reliance on third-party reinsurance and its exposure to illiquid investments, including equity holdings in affiliated underwriting agencies.

AM Best views HIC’s operating performance as adequate. The company recorded an average return-on-equity ratio of 1.9 per cent between fiscal years 2017-2021 on an unconsolidated basis, with the operating results trending downward significantly over the past two fiscal years, primarily as a result of increased COVID-19 related provisions.

AM Best assesses HIC’s business profile as neutral. The company is the fifth largest non-life insurer in Australia based on gross written premiums, albeit occupying a modest market share of approximately four per cent in 2021.

HIC maintains a strong market position in certain niche segments, including the pet insurance sector. The company has recorded robust premium growth over the past 10 years, supported by a diversified network of distribution partners and affiliated underwriting agencies in Australia and New Zealand.

More details at www.ambest.com.

-- BERNAMA