Best’s News & Research Service - May 17, 2019 11:39 AM (EDT)
AM Best Affirms Credit Ratings of Health Services Welfare Society Limited
- May 17, 2019 11:39 AM (EDT)
Singapore //BestWire// - AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Health Services Welfare Society Limited (New Zealand), trading as Accuro Health Insurance (Accuro). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Accuro’s balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Accuro’s balance sheet strength is underpinned by risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is categorized as adequate. This reflects the company’s relatively high underwriting leverage compared with other New Zealand health insurers, and its small capital base, which increases the potential for volatility in its risk-adjusted capitalization. Furthermore, as a mutual insurer, the company has limited financial flexibility.
Operating performance is adequate, with a moderate level of volatility, as demonstrated by a five-year average operating ratio of 96.7% (fiscal-years 2014-2018). Accuro has a track record of positive earnings, driven by its sound underwriting performance and robust investment returns. However, the company’s underwriting performance deteriorated in 2018, mainly owing to its adverse claims experience. In response, the company increased prices across most of its products. Prospectively, AM Best expects Accuro to maintain adequate operating performance, supported by a robust pricing strategy and stable investment returns.
Accuro is a not-for-profit organization that provides health insurance in New Zealand. The company’s business profile assessment of limited is due to its relatively small-scale operations, and limited product and geographical diversification in New Zealand. It is a small insurer in New Zealand’s health insurance industry, with a market share of less than 2% based on gross premiums in 2018. Despite challenging market conditions, membership has grown steadily over the past five years due to the development of new products.
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 Understanding 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.
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