SINGAPORE, March 25 (Bernama-BUSINESS WIRE) -- AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of New Zealand Medical Professionals Limited (NZMPL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

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

NZMPL’s balance sheet strength is underpinned by its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which remains at the strongest level. However, an offsetting factor to the balance sheet strength assessment is the company’s small absolute capital base, which increases the sensitivity of capital adequacy to shock events. Prospective risk-adjusted capitalization also is dependent on NZMPL’s ability to retain earnings, which is primarily driven by its underwriting performance and level of dividend distribution. In addition, AM Best considers the company to have limited financial flexibility, with a dependence on shareholders for financial support, if needed. These offsetting factors are mitigated partially by the company’s new reinsurance protection, which has reduced the company’s net retention on any single claim and is expected to decrease earnings volatility in the future.

AM Best views NZMPL’s operating performance as strong albeit with a moderate level of volatility, underpinned by a five-year average return on equity ratio of 11.4% (fiscal years 2014-2018). The company has a track record of positive earnings driven by its sound underwriting performance and robust investment returns. Nonetheless, the company’s underwriting performance in 2018 has deteriorated due to adverse claims experience. In response, the company has increased prices across most of its product range. Prospectively, AM Best expects NZMPL to maintain favorable operating results supported by a robust underwriting discipline and stable investment returns.

AM Best views NZMPL’s business profile as limited. The company is a small and niche insurer in New Zealand that focuses on providing medical indemnity insurance to medical practitioners and health professionals. As a monoline insurer that operates solely in New Zealand, the company has limited product and geographical diversification. NZMPL has a low product risk profile with a small average claims size. The company’s claims consist largely of legal fees as most medical injury claims are covered by the Accident Compensation Corporation in New Zealand. Through its affiliation with the New Zealand Resident Doctors’ Association, NZMPL has access to business with low distribution costs.

NZMPL’s ERM is viewed as marginal given the size and complexity of its operations. NZMPL has some exposure to operational risk as the company has outsourced most of its operations to third-party service providers given its small size.

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.

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Contact

Sin Yee Chuah
Associate Financial Analyst
+65 6303 5022
sinyee.chuah@ambest.com

Myles Gould
Associate Director, Analytics
+65 6303 5020
myles.gould@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