Best’s News & Research Service - February 12, 2026 08:59 AM (EST)
AM Best Affirms Credit Ratings of FMG Insurance Limited
- February 12, 2026 08:59 AM (EST)
//BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of FMG Insurance Limited (FMGIL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect FMGIL’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 (ERM). In addition, the ratings factor in a neutral holding company impact from FMGIL’s 100% ownership by Farmers’ Mutual Group (FMG).
FMGIL’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This is supported by the company’s robust internal capital generation and prudent capital management. FMGIL is considered to have a comprehensive reinsurance programme that provides protection against high-severity modelled catastrophe events in New Zealand. AM Best views the company’s investment portfolio to be of moderate risk with a focus on cash and high-quality fixed-income securities, albeit with some exposure to equities. A partially offsetting balance sheet strength factor is FMGIL’s limited financial flexibility, given its ultimate ownership by FMG, a mutual organisation.
AM Best assesses FMGIL’s operating performance as adequate. The company recorded robust underwriting profits over the last five fiscal years, albeit exhibiting a moderate level of volatility driven by catastrophic events. In fiscal-year 2025, the company recorded a combined ratio (net/net, IFRS 17) of 80.4% and a return-on-equity of 26.4%, as calculated by AM Best. During the fiscal year, FMGIL’s underwriting performance benefitted from below-average catastrophe losses in New Zealand. Investment income remains a key contributor to overall earnings, with FMGIL reporting a net investment yield (including capital gains/losses) of 5.6% in fiscal-year 2025. Prospectively, AM Best expects the company’s robust pricing strategy and positive investment returns to support the adequate operating performance assessment.
AM Best views FMGIL’s business profile as neutral. The company benefits from its established profile as a leading rural insurer in New Zealand, despite having a modest market share of the overall non-life segment. FMGIL has a strong direct distribution model that is built on long-standing customer relationships and supported through its ownership by FMG, which has a long history and strong brand recognition in New Zealand’s rural sector. Whilst operating solely in New Zealand, FMGIL’s premium base is better diversified geographically compared with other domestic general insurers, as its focus on the rural sector helps to diversify its insured risks across the country.
AM Best assesses FMGIL’s ERM as appropriate. Regulatory compliance remains a key focus area in view of the recent regulatory developments in New Zealand. A recent investigation by the Financial Market Authority, following a self-report by the company, revealed historical fair dealing breaches that resulted in a penalty payment. The company is actively working on customer remediation and strengthening its internal controls.
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.