Press Release - SEPTEMBER 13, 2018

A.M. Best Affirms Credit Ratings of Co-operative Life Limited

 Sin Yee Chuah
Associate Financial Analyst
+65 6303 5022

Myles Gould
Associate Director, Analytics
+65 6303 5020

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Co-operative Life Limited (Co-op Life) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Co-op Life’s balance sheet strength, which A.M. Best categorizes as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Co-op Life’s balance sheet strength is underpinned by risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to reach the strongest level over the near term. While high dividend payments in recent years have led to a decline in shareholders’ equity, A.M. Best expects the full retention of earnings in fiscal year 2019 to result in risk-adjusted capitalization being bolstered to the strongest level. Furthermore, A.M. Best projects capital adequacy to be maintained at this level in the future as a result of robust internal capital generation. Offsetting balance sheet factors include the company’s small absolute capital base, which increases its sensitivity to shock events, as well as to changes in future performance, dividend payouts and intangible assets.

Co-op Life has a track record of strong operating performance, with the company having reported a five-year average return on equity of 32% (fiscal years 2014-2018). Profitability over this period has been driven by underwriting activities, reflecting the excellent performance of its in-force life business. Prospectively, A.M. Best expects favorable claims experience to drive continued strong operating performance.

A.M. Best views Co-op Life’s business profile as limited given its small scale of operations. The company has a market share of less than 1% in New Zealand’s life insurance industry based on 2018 gross written premiums. Although Co-op Life benefits from distributing its products through its parent, The Co-operative Bank Limited, the company has a low penetration rate among the bank’s customer base. In addition, the company has limited product and geographic diversification 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 A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.

Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.

AMB# Company Name
058566 Co-operative Bank Limited
091826 Co-operative Life Limited