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FOR IMMEDIATE RELEASE
HONG KONG - SEPTEMBER 29, 2010 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Ansvar Insurance Limited (Ansvar Insurance) (New Zealand). The outlook for both ratings is stable.
The ratings reflect Ansvar Insurance's improved underwriting performance, solid capitalization and focused business strategy within its niche market segments in New Zealand.
Ansvar Insurance continues to utilize parental support from Ecclesiastical Insurance Office plc through catastrophe reinsurance arrangements. Ansvar Insurance also maintains minimal net exposure to catastrophic losses in New Zealand, which has protected its surplus against the severe earthquake in Christchurch earlier this month. The company's risk-adjusted capitalization, as demonstrated by Best's Capital Adequacy Ratio (BCAR), remained solid with a repatriation of dividends to its immediate parent, Ansvar Insurance Limited (Australia) for the first time in 2009. Ansvar Insurance maintains good liquidity relative to risks underwritten. A.M. Best anticipates the company's risk-adjusted capitalization is likely to remain supportive of its business plan.
Ansvar Insurance produced stronger underwriting results in 2009, with continued rate adjustments and generally favorable lapse experience. The company maintained a yearly growth of 19% in premiums written for 2009. Underwriting profitability somewhat improved, given the combined impact of higher premium income and absence of significant catastrophe losses.
In addition to maintaining its solid niche position within non-profit community groups, Ansvar Insurance is committed to increasing new sales through new product offerings in its focused segments to support targeted business growth going forward.
These strengths are partially offset by anticipated slower business growth and subdued investment income.
The rate increases in late 2009 have enhanced the company's underwriting profitability; however, slower new business growth has been reflected for the first half of 2010. Prospectively, Ansvar Insurance will continue to face challenges in maintaining its targeted business growth with favorable underwriting profitability, relative to the 2009 level.
Ansvar Insurance's net investment yield has been in a downward trend over the past three years. In addition to increasingly competitive commercial market conditions in New Zealand, the company's overall earnings could be negatively impacted by subdued investment returns due to a relatively low short-term interest rate climate.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers" and "Understanding Universal BCAR." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.