More than half of Quest Insurance Group’s gross written premium in fiscal year 2026 came through a single third-party distributor’s channel, and AM Best has downgraded its view of the New Zealand motor insurer’s risk management to marginal.
The agency affirmed Quest’s Financial Strength Rating of B (Fair) and its Long-Term Issuer Credit Rating of “bb+” (Fair), with a stable outlook on both. It assessed Quest’s business profile as limited because of its small presence in the sector, geographic concentration and a relatively niche product offering.
Quest mainly provides comprehensive vehicle insurance and mechanical breakdown insurance (MBI). According to AM Best, its operational scale has grown significantly over five years, mostly through the third-party distributor, and AM Best regards Quest’s reliance on that distributor as material.
AM Best’s 2026 announcement does not name the distributor. Its 2023 rating announcement named Janssen Insurance, a third-party distributor, as the source of more than half of Quest’s premium in fiscal year 2023.
The agreement behind that relationship is approaching a deadline. Quest’s parent, Geneva Finance, announced in 2022 that the Quest and Janssen distribution agreement had been extended to March 2027, about five months from now. Given AM Best’s concern about concentration, whether that agreement is renewed, and on what terms, is the question for dealers and brokers who place business with Quest.
Geneva Finance’s audited accounts for the year to March 31, 2026 show Quest’s gross written premium rose to NZ$70.6 million from NZ$55.8 million, an increase of about 27%. Acquisition costs, which the accounts list as commissions, climbed faster, to NZ$17.7 million from NZ$12.2 million, an increase of about 45%.
Growth has continued since. Geneva Finance said the number of dealers writing Quest policies rose 10.2% in the June quarter, while Quest’s unaudited net premium income increased 19% to NZ$16.9 million.
AM Best revised its enterprise risk management (ERM) assessment to marginal from appropriate. The agency said Quest’s framework is still evolving, and noted weaknesses in its capabilities relative to its risk profile.
AM Best expects further improvements to support Quest’s operational scale, but said “these improvements may take time to embed and will need to be tested.”
In November 2024, the Reserve Bank of New Zealand (RBNZ) warned Quest over prolonged failures to maintain its minimum non-life solvency margin and its life statutory fund. The RBNZ said Quest acknowledged and remedied the breaches, which did not affect claims payments, and was implementing further risk management measures.
In August, a Financial Markets Authority (FMA) review of add-on insurance at nine insurers, covering products including MBI, found limited evidence of oversight proportionate to the risks of commission-based and intermediated sales. Intermediated distribution is also among the FMA’s priorities for 2026/27.
AM Best raised its operating performance assessment to strong from adequate. It cited a record of strong and stable results over fiscal years 2022 to 2026, supported by insurance service results and positive investment returns.
In fiscal year 2026, Quest reported a combined ratio (net/net, IFRS 17) of 86.0% and a return on equity of 33.0%. Investment income remained a stable contributor to profit, with a net investment yield of 3.2%.
AM Best assesses Quest’s balance sheet strength as adequate. Risk-adjusted capitalisation was at the strong level on March 31, 2026, according to Best’s Capital Adequacy Ratio (BCAR). The agency expects capitalisation to remain at least strong, supported by internal capital generation, and regulatory solvency to stay appropriate because of prudent capital management.
However, Quest’s absolute capital stood at NZ$22.7 million at fiscal year-end 2026. AM Best said that small size increases the sensitivity of its capital adequacy to stress scenarios, such as outsized dividend payments or swings in future performance.
Quest’s combined solvency cover ratio was 144% at March 31, 2026. That position incorporates NZ$3.0 million of dividends declared and paid to Geneva Finance after balance date. By the June quarter, Geneva reported Quest’s solvency coverage ratio at 153%.
The RBNZ has proposed replacing the single solvency margin with two thresholds, a Prescribed Capital Requirement and a Minimum Capital Requirement, to give it an explicit basis to escalate supervision as an insurer’s capital weakens.
The ratings factor in a neutral holding company impact from immediate shareholder Geneva Finance Limited and ultimate majority shareholder Federal Pacific Group Limited.
