SINGAPORE, April 3 (Bernama-BUSINESS WIRE) -- A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Pacific International Insurance Pty Limited (Pacific) (Australia). The outlook of these Credit Ratings (ratings) is stable.
 
The ratings reflect Pacific’s strong risk-adjusted capitalization, positive operating performance and high-quality investment portfolio. The ratings also acknowledge Pacific’s expertise in Australia’s pest control and building inspection market.
 
Offsetting rating factors are the company’s stagnant growth rates and weak underwriting profitability. Pacific is a niche insurer that runs a broad service model, which enables it to achieve a more favorable claims experience relative to its competitors. However, aggressive pricing by its competitors has created a difficult environment for Pacific to grow its premium revenue. As a result, due to lack of scale, Pacific’s expense ratio has remained high; therefore, so has its combined ratio.
 
In addition, due to its small scale, Pacific’s underwriting results are highly sensitive to a few larger claims or one-off expenses. Nevertheless, this volatility is partially offset by Pacific’s low underwriting leverage and a substantial buffer from a stable stream of investment income.
 
Although Pacific is well-positioned at the current rating level, negative rating actions could occur if there is significant deterioration in Pacific’s risk-adjusted capitalization due to unexpected capital repatriation, or if its profitability falls below A.M. Best’s expectation due to competitive pressures or multiple large claims.
 
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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
 
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
 
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHT RESERVED.
 
Contacts
A.M. Best
Jason Shum, +65 6589 8400, ext. 217
Senior Financial Analyst
jason.shum@ambest.com
or
Moungmo Lee, +65 6589 8400, ext. 210
Managing Director, Analytics
moungmo.lee@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Source: A.M. Best
 
View this news release online at:
http://www.businesswire.com/news/home/20170331005530/en
 
--BERNAMA