A.M. Best Affirms Ratings of AMI Insurance Limited

HONG KONG--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” ofAMI Insurance Limited (the old AMI) (New Zealand). The outlook for both ratings is stable.

Following the sale of its non-Christchurch earthquake-related portfolio to IAG (NZ) Holdings Limited on April 5, 2012, AMI Insurance Limited will change its name to Southern Response Earthquake Services Limited by close of business of the same day.

The affirmations reflect the expected improvement in the old AMI’s risk-adjusted capitalization, its expected reduction in underwriting risk as well as continued government support and its anticipated status as a Crown entity.

The anticipated sale of the old AMI’s non-Christchurch earthquake-related insurance business is expected to improve its risk-adjusted capital position. Underwriting risk will fall, as the company will cease writing new insurance policies from close of business of the same day. The financial government support that was put into place April 2011 will remain and continue to support the old AMI’s balance sheet. The company will become a Crown entity from April 5, 2012, as the New Zealand government will assume majority voting rights in the company. In A.M. Best’s view, this has positive implications on the company’s risk-adjusted capitalization.

Offsetting these positive factors are the old AMI’s high reinsurance receivable balances and continued uncertainties relating to the value of the claims estimates.

Due mostly to the old AMI’s remaining earthquake claims and associated reinsurance recoverable balances, the improvement of the old AMI’s risk-adjusted capitalization will be dependent on the pace at which the reinsurance receivable balances can be recovered. In addition, upward revisions to the claims estimates could negatively impact the company’s risk-adjusted capitalization.

A.M. Best considers that the old AMI is well placed for its current ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include “Understanding Universal BCAR.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Chi-Yeung Lok,+852-2827-3414
Financial Analyst
[email protected]
or
Moungmo Lee, +852-2827-3402
General Manager
[email protected]
or
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.