Oldwick, N.J. (BUSINESS WIRE) - A.M. Best Co. has affirmed the financial strength rating of A-(Excellent) and issuer credit rating of "a-" of Credit & General Insurance Limited (CGIL) (New Zealand).
The outlook for both ratings is stable.
The ratings reflect CGIL's conservative risk-adjusted capitalization, consistent operating performance and strong liquidity. The ratings also consider the company's exclusive distribution arrangement with the Farmers retail chain, one of the largest retail department stores in New Zealand.
CGIL's low claims experience and cautious expense control resulted in continual emergence of underwriting earnings in 2008. CGIL lowered its expense ratio to 37.3% in 2008 from 45.9% in 2007 due primarily to the reduction in acquisition costs. Its insurance book continued to record a favorable loss experience, although the overall premium volume on an absolute basis remained relatively small.
Strong underwriting performance along with a stable investment yield led to a consistent surplus growth, translating into a further improvement in CGIL's risk-adjusted capitalization in 2008. Best's Capital Adequacy Ratio (BCAR), which measures capitalization on a risk-adjusted basis, reflects that the company maintained a solid capital position supportive of its ratings. In view of CGIL's stable operating profitability and moderate business growth, A.M. Best anticipates that the company will maintain a relatively conservative level of risk-adjusted capitalization in the near term.
CGIL's investment portfolio was liquid, with cash and money market deposits representing more than 95% of its assets at year-end March 2008. Investment assets to total liabilities increased to 13.4 times in 2008 from 10.9 times in 2007. A.M.
Best anticipates CGIL's investment portfolio to remain conservative and highly liquid in the near term.
Offsetting rating factors include CGIL's business concentration risk in the consumer credit sector and limited insurance growth prospects.
CGIL's operating results are subject to the performance of the economy and consumer credit market in New Zealand.
Given that CGIL predominantly relies on Farmers as its core distribution channel, the company's business growth is heavily dependent upon the operating performance of Farmers' retail business. CGIL's narrow product range, along with concentration risk in its distribution channel, could limit its growth prospects.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial
and health care service industries, including insurance companies, banks, hospitals and health care system providers.
For more information, visit www.ambest.com.
A.M. Best
Analysts
Billy Wong, +852-2827-3414 billy.wong@ambest.com
or Terrence Wong, +852-2827-3403 terrence.wong@ambest.com
or Public Relations
Jim Peavy, +(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
or Rachelle Morrow, +(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com
The outlook for both ratings is stable.
The ratings reflect CGIL's conservative risk-adjusted capitalization, consistent operating performance and strong liquidity. The ratings also consider the company's exclusive distribution arrangement with the Farmers retail chain, one of the largest retail department stores in New Zealand.
CGIL's low claims experience and cautious expense control resulted in continual emergence of underwriting earnings in 2008. CGIL lowered its expense ratio to 37.3% in 2008 from 45.9% in 2007 due primarily to the reduction in acquisition costs. Its insurance book continued to record a favorable loss experience, although the overall premium volume on an absolute basis remained relatively small.
Strong underwriting performance along with a stable investment yield led to a consistent surplus growth, translating into a further improvement in CGIL's risk-adjusted capitalization in 2008. Best's Capital Adequacy Ratio (BCAR), which measures capitalization on a risk-adjusted basis, reflects that the company maintained a solid capital position supportive of its ratings. In view of CGIL's stable operating profitability and moderate business growth, A.M. Best anticipates that the company will maintain a relatively conservative level of risk-adjusted capitalization in the near term.
CGIL's investment portfolio was liquid, with cash and money market deposits representing more than 95% of its assets at year-end March 2008. Investment assets to total liabilities increased to 13.4 times in 2008 from 10.9 times in 2007. A.M.
Best anticipates CGIL's investment portfolio to remain conservative and highly liquid in the near term.
Offsetting rating factors include CGIL's business concentration risk in the consumer credit sector and limited insurance growth prospects.
CGIL's operating results are subject to the performance of the economy and consumer credit market in New Zealand.
Given that CGIL predominantly relies on Farmers as its core distribution channel, the company's business growth is heavily dependent upon the operating performance of Farmers' retail business. CGIL's narrow product range, along with concentration risk in its distribution channel, could limit its growth prospects.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial
and health care service industries, including insurance companies, banks, hospitals and health care system providers.
For more information, visit www.ambest.com.
A.M. Best
Analysts
Billy Wong, +852-2827-3414 billy.wong@ambest.com
or Terrence Wong, +852-2827-3403 terrence.wong@ambest.com
or Public Relations
Jim Peavy, +(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
or Rachelle Morrow, +(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com
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