AM Best Affirms Credit Ratings of Police Health Plan Limited
- July 02, 2026 09:21 AM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Police Health Plan Limited (PHP) (New Zealand). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect PHP’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the company’s ultimate ownership by the New Zealand Police Association (NZPA).
The negative outlooks reflect the ongoing pressure on PHP’s balance sheet strength fundamentals. Whilst recent operating performance exhibited an improving trend, historical underwriting losses have resulted in capital erosion, and a material decline in risk-adjusted capitalisation.
PHP’s balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). Notwithstanding, the company’s BCAR scores exhibited a declining trend in fiscal-years 2024 and 2025, driven by operating losses. Prospective risk-adjusted capitalisation is expected to improve, supported by internal capital generation. In addition, the company has a modest capital base and limited financial flexibility, which increases the sensitivity of its capital adequacy to stress scenarios or fluctuations in performance. AM Best views the company’s investment strategy to be low risk, with its investment portfolio consisting of cash and term deposits.
AM Best assesses PHP’s operating performance as adequate. Following portfolio remediation actions over recent periods, PHP reported improved operating performance metrics and returned to profitability in the first nine months of fiscal-year 2026. In fiscal-years 2024 and 2025, the company’s underwriting performance was impacted by high claims inflation in the New Zealand health insurance industry. As a not-for-profit insurer, investment income remains a key contributor to overall earnings.
PHP provides health insurance exclusively to current and former members of the New Zealand police and their families. Despite having a relatively small premium base in New Zealand’s health insurance market, the company’s business profile assessment factors in its high penetration rate within the police force and its close integration with the NZPA, which gives rise to synergy and efficiency benefits. PHP has preferential access to the NZPA member base, benefits from low distribution costs and shares overhead with the broader group.
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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings (BCR), Best’s Performance Assessments (PA), Best’s Preliminary Credit Assessments (PCA) and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.