CONTACTS:
FOR IMMEDIATE RELEASE
SINGAPORE - APRIL 22, 2022 09:32 AM (EDT)
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Tower Limited (Tower) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Tower’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).
Tower’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which was at the strongest level at fiscal year-end 2021 (30 September 2021) and is expected to remain at least at the very strong level over the medium term. Whilst the company is expected to maintain an elevated dividend payout ratio, retained earnings are expected to be sufficient to support new business growth and sustain robust regulatory solvency coverage. AM Best views Tower as having strong financial flexibility, a prudent reinsurance programme and a conservative investment strategy.
AM Best assesses Tower’s operating performance as adequate. Following the settlement of the majority of claims arising from the Canterbury Earthquake events, the company’s underwriting profits have improved notably over the past three fiscal years, with the combined ratio remaining below 95% during this period. Prospectively, AM Best expects Tower to report positive underwriting and operating results, supported by appropriate risk selection and pricing, as well as through anticipated expense efficiencies achieved by core system upgrades in recent years.
AM Best views Tower’s business profile as neutral. The company is a medium-sized non-life insurer that operates predominantly in New Zealand, with some operations based in the Pacific Islands. Tower has a market share of approximately 5% in New Zealand’s general insurance market and reported gross written premium of NZD 405 million (USD 280 million) in fiscal year 2021. The company’s core product offerings are domestic home and motor insurance, typically distributed through direct channels and partnerships.
Tower’s ERM framework is developed and considered appropriate given the size and complexity of its operations. The company’s risk management capabilities also are assessed to be robust and typically aligned with the profile of the company’s key risks.
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, Best’s Performance Assessments, Best’s Preliminary Credit Assessments 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 specialising 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.