Ratings agency A.M. Best has affirmed insurance firm Co-operative Life Limited’s financial strength rating of B++ (Good) and its long-term issuer credit rating of “bbb+.” The outlook of these ratings is stable.

According to A.M. Best, the ratings reflect Co-op Life’s adequate balance sheet strength, strong operating performance, limited business profile and appropriate enterprise risk management.

“While high dividend payments in recent years have led to a decline in shareholders’ equity, A.M. Best expects the full retention of earnings in fiscal year 2019 to result in risk-adjusted capitalisation being bolstered to the strongest level,” the ratings agency said. “Furthermore, A.M. Best projects capital adequacy to be maintained at this level in the future as a result of robust internal capital generation.”

A.M. Best views Co-op Life’s business profile as limited given its small scale of operations. The company has a market share of less than 1% in New Zealand’s life insurance industry.

With the company having reported a five-year average return on equity of 32% (fiscal years 2014-2018), its favourable claims experience is expected to drive continued strong operating performance, the ratings agency added.