FEBRUARY 04, 2020 10:42 AM (EST)
AM Best Affirms Credit Ratings of Cigna Life Insurance New Zealand Limited
FOR IMMEDIATE RELEASE
SINGAPORE - FEBRUARY 04, 2020 10:42 AM (EST)
These rating actions follow the completion of a portfolio transfer on Jan. 31, 2020, whereby CLINZ acquired 100% of the assets and liabilities of OnePath Life (NZ) Limited (OPL). Cigna Corporation (Cigna or the Cigna group) previously purchased OPL from ANZ Bank New Zealand Limited (ANZ Bank) in November 2018. The recent portfolio transfer represents the final phase of the acquisition process, combining the business operations of CLINZ and OPL.
The ratings reflect CLINZ’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. Furthermore, CLINZ’s ratings factor in rating enhancement from the Cigna group.
CLINZ’s balance sheet strength is underpinned by its risk-adjusted capitalization, which AM Best expects to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the company’s local regulatory solvency position in New Zealand is expected to be maintained at an appropriate level, supported by its capital management strategy and AM Best’s expectation that financial support from the Cigna group will be forthcoming, if required.
The company has a track record of reporting positive underwriting and investment results, with operating performance metrics expected to remain at an adequate level over the medium term. While AM Best expects some near-term expenses to arise from integration and transaction costs emanating from the OPL transfer, over the medium term the increased scale of the combined businesses is expected to support lower expense ratios.
Following the OPL transfer, CLINZ ranks among the largest life insurance companies in New Zealand. Furthermore, a shift in product mix resulting from the combined businesses has supported increased diversification across product lines, albeit with a greater emphasis on term life insurance. CLINZ’s business profile also benefits from a 20-year bancassurance distribution agreement in place between the Cigna group and ANZ Bank.
CLINZ’s ratings incorporate rating enhancement from the Cigna group, which is a U.S. health services organization with a strong position providing medical benefits globally. CLINZ is ultimately wholly owned by Cigna, and while the subsidiary accounts for a small component of the group’s overall revenues and earnings, the OPL acquisition and transfer to CLINZ is viewed to grow the group’s presence notably in New Zealand.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.