SINGAPORE, Feb 18 (Bernama-BUSINESS WIRE) -- AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of The Hollard Insurance Company Pty Ltd (HIC) (Australia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect HIC’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The company’s balance sheet strength assessment is underpinned by its unconsolidated risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to improve to a very strong level in fiscal-year 2019. Over recent years, growth in underwriting operations at HIC has driven increasing capital requirements; however, a combination of capital injections and a hybrid debt issuance have aided to bolster capital adequacy and support planned business expansion. Other balance sheet considerations include the company’s robust financial flexibility, adequate reserving approach, reliance on reinsurance and its exposure to illiquid investments arising from equity holdings in affiliated underwriting agencies. AM Best’s balance sheet strength analysis also incorporates a neutral holding company impact following an assessment of consolidated risk-adjusted capitalization at HIC’s immediate parent, Hollard Holdings Australia Pty Ltd. (HHA).

AM Best views HIC’s operating performance as adequate. On an unconsolidated basis, the company has reported operating profits in each of the past five years (fiscal-years 2014-2018), with an average return on equity ratio of 5.7%. The company’s equity holdings in strategic and associated underwriting agencies have supported robust, albeit variable, investment returns, which are a key driver of overall earnings at present. HIC’s combined ratio has exhibited an improving trend over recent years, although it has remained marginally loss-making in fiscal-year 2018. As HIC only prepares financial statements on an unconsolidated basis, HHA’s consolidated performance also has been considered as part of the operating performance assessment. HHA consolidates the operations of HIC as well as all of its majority held strategic investments in underwriting agencies.

AM Best assesses HIC’s business profile as neutral. The company has grown to be one of the top 10 non-life insurers in Australia, based on gross written premiums, albeit occupying a modest market share of 2% in 2018. HIC maintains a strong market position in certain niche segments, including the pet insurance sector. The company continues to target high growth over the medium term, supported by its business model of establishing strategic partnerships with a network of distributors and underwriting agencies.

AM Best considers HIC’s ERM as appropriate given the size and complexity of the company’s operations.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Contact

Yi Ding
Financial Analyst
+65 6303 5021
yi.ding@ambest.com

Jason Shum
Associate Director, Analytics
+852 2827 3424
jason.shum@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Source : AM Best

--BERNAMA