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FOR IMMEDIATE RELEASE
HONG KONG - APRIL 03, 2014 01:17 PM (EDT)
A.M. Best has affirmed the financial strength rating of B++ (Good) and issuer credit rating of "bbb" of Pacific International Insurance Limited (Pacific) (New Zealand). The outlook for both ratings remains stable.
The affirmations reflect Pacific's strong business profile, profitable operating results and strong risk-adjusted capitalization.
Pacific benefits from its affiliation with Rapid Solutions Pty Limited and Rapid Training Pty Limited, through which Pacific derives the vast majority of its premiums. The companies' established brand name and expertise in the pest and building inspection market enable Pacific to control its claims experience through superior risk selection and control. Pacific continues to deliver favorable underwriting results in fiscal year 2013 and is expected to retain a high proportion of earnings over the next three years. Investment strategy and underwriting leverage both remain conservative, which are reflected in the company's strong Best's Capital Adequacy Ratio score.
Partially offsetting rating factors include a high expense ratio and a competitive business environment. Due to ongoing competitive pressure from larger insurance players in Australia, Pacific's premium revenues have been stagnant over recent years. Together with additional operating expenses related to the company's intended migration to Australia, its expense ratio could remain high in fiscal year 2014. In the short term, the company is also exposed to volatility of the NZD/AUD exchange rate as NZD-denominated assets are held for tax and regulatory reasons.
Pacific is well positioned at its current rating level. Negative pressure on the ratings could occur if Pacific's risk-adjusted capitalization deteriorates materially due to unexpected capital repatriation, or its operating performance falls below A.M. Best's expectation due to a high loss ratio.
The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.