Ratings agency A.M. Best has affirmed the “B++” (Good) financial strength rating and the “bbb” long-term issuer credit rating of The Education Benevolent Society Incorporated (EBS). The outlook for the firm is stable.
According to A.M. Best, the ratings reflect EBS’s balance sheet strength, which it categorises as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
“EBS’s balance sheet strength is supported by risk-adjusted capitalization that is maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR),” it said.
“The company has relatively low underwriting leverage and favorable balance sheet liquidity. However, its regulatory solvency margin is modest compared with other New Zealand health insurers.”
EBS’s operating performance is adequate but has been very sensitive to one-off expenses due to its small scale. Prospectively, A.M. Best expects the company to continue delivering neutral overall earnings with moderate volatility, supported by steady revenue growth, adequate product pricing and investment income.
Moreover, EBS is deemed to be well-positioned for its current rating level. However, negative rating actions may occur if there is a significant deterioration in its operating results, or if its competitive market position in its niche education union sector is weakened, the agency added.
EBS is a non-profit organization that provides medical insurance exclusively to the members and employees of the six educational unions that own the company.