AM Best Affirms Credit Ratings of PPS Mutual Limited
- July 23, 2026 09:05 AM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of PPS Mutual Limited (PPS Mutual) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PPS Mutual’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). In addition, the ratings factor in a neutral holding company impact from PPS Mutual’s owner, PPS Holdings Limited (PPS Holdings).
PPS Mutual’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2025, as measured by Best’s Capital Adequacy Ratio (BCAR), and is expected to remain at that level over the medium term. AM Best considers PPS Mutual’s capital management plan as appropriate to support its planned business expansion during the start-up phase of its operations, taking into account capital injections from PPS Holdings, as needed. AM Best views PPS Mutual to have a high reliance on third-party reinsurance for risk transfer and upfront commission financing. This risk is partially mitigated by the high credit quality of the reinsurance counterparty. Another offsetting balance sheet strength factor is PPS Mutual’s small absolute capital base, which exposes its capital adequacy to potential volatility in the event of stress scenarios.
PPS Mutual’s balance sheet strength assessment also factors in a neutral holding company assessment, following a review of PPS Holdings. Whilst PPS Holdings’ financial leverage is expected to be elevated, servicing of the perpetual loan at PPS Holdings is not expected to impact PPS Mutual’s capital adequacy, given its ability to defer interest payments and loan repayments.
AM Best assesses PPS Mutual’s operating performance as adequate. The company recorded an operating loss in 2025, driven by a significant upfront investment in system infrastructure and start-up expenses. Prospectively, AM Best expects the company to record improved operating results over the next five years, as the company executes its business plan and increases its economies of scale. In addition, PPS Mutual is expected to benefit from reinsurance commission income, which will help to offset outward acquisition costs during the initial growth phase.
AM Best views PPS Mutual’s business profile as limited, reflecting its small operational scale and start-up nature. The company is a member-owned insurer domiciled in New Zealand, distributing life insurance policies to a target segment of the professional market, through independent financial advisers. PPS Mutual is expected to adopt a fast-growing business strategy over the medium term, exposing the company to elevated execution risk. However, this risk is partially mitigated by the support from Professional Provident Society Insurance Company Limited, an affiliated South African insurer.
PPS Mutual’s ERM is assessed as appropriate given the size and complexity of the company’s operations. AM Best considers continual risk management developments necessary in order to support its increasing operational scale and evolving risk profile.
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.