Ratings agency AM Best has affirmed Kiwi Insurance’s financial strength rating of “A-” (Excellent) and its long-term issuer credit rating of “a-.” The outlook of the ratings is stable.
According to AM Best, the ratings reflect Kiwi Insurance’s strong balance sheet strength, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Over the medium term, AM Best expects full earnings retention to support Kiwi Insurance’s planned growth initiatives. AM Best views the insurer’s modest absolute capital base as increasing the sensitivity of risk-adjusted capitalisation to shock events, as well as to changes in future performance and dividend payments.
Despite the resulting increase in near-term expenses, AM Best also expects Kiwi Insurance to maintain an adequate operating performance.
Kiwi Insurance is a majority-owned subsidiary of state agency NZ Post. Despite a market share of less than 2%, AM Best views Kiwi Insurance’s strong affiliated distribution channels as a benefit.
“The company’s parent, NZ Post, and its sister company; Kiwibank Limited, have extensive nationwide branch networks that support the distribution of Kiwi Insurance’s products. In addition, as part of the NZ Post group, Kiwi Insurance benefits from cross-selling opportunities, low acquisition costs and access to shared group resources,” AM Best said. “Despite challenging market conditions, the company’s in-force book has grown steadily over the past five years, supported by the development of new products.
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“Going forward, the company’s growth strategy is expected to benefit from increased distribution through digital channels,” the ratings agency added.
