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FOR IMMEDIATE RELEASE
HONG KONG - JANUARY 31, 2013 12:00 AM (EST)
A.M. Best Asia-Pacific Limited has upgraded the financial strength rating to B (Fair) from B- (Fair) and issuer credit rating to “bb+” from “bb-” of ACS (NZ) Limited (ACS) (New Zealand). Both ratings remain under review with developing implications.
ACS’ ratings were downgraded and placed under review with developing implications on July 17, 2012 due to regulatory risk, continued high reinsurance recoverable risk and slower than anticipated claims settlement.
Since then, cash settlements of the largest claims helped to significantly reduce reinsurance recoverables risk, which has helped to strengthen ACS’ regulatory solvency margin and reduced the regulatory risk facing ACS. The settlement of the largest claims also has reduced the risk to further potential adverse claims development.
Offsetting rating factors include continued credit risk related to reinsurance recoverables, as these balances still amount to over 10 times ACS’ capital.
More clarity is needed concerning the ongoing discussions between ACS and the Reserve Bank of New Zealand and the reinsurance buffer available for February 2011 earthquake claims to resolve the under review status.
The methodology used in determining these 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. Key criteria utilized include: “Understanding Universal BCAR.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.