A.M. Best Affirms Credit Ratings of FMG Insurance Limited

Business Wire

SINGAPORE--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of FMG Insurance Limited (FMGIL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect FMGIL’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect FMGIL’s modest underwriting leverage, prudent capital management policy and direct distribution network capability.

FMGIL has a well-established profile within New Zealand’s farming and rural sector. Due to its rural and provincial focus, FMGIL’s insured risks are spread widely across the country. Hence, FMGIL has less geographic risk concentration proportionally relative to its peers. In turn, FMGIL is able to maintain adequate catastrophe protection, while keeping reinsurance costs affordable through a robust reinsurance program.

Partially offsetting rating factors are FMGIL’s variable operating performance and a deteriorating trend in its underwriting performance in recent years. Operating results in fiscal years 2016 and 2017 in particular took a downturn, primarily due to claims costs from multiple weather events along with the impact of the November 2016 Kaikoura earthquake. In response, the company has implemented price increases across business lines, and prospective underwriting results are expected to improve.

Positive rating actions are unlikely in the short term. Negative rating actions could occur if there is significant deterioration in FMGIL’s risk-adjusted capitalization as a result of multiple catastrophe event losses.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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

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A.M. Best

Larina Huang, +65 6503 5012

Associate Financial Analyst

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or

Jason Shum, +65 6303 5020

Associate Director

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or

Christopher Sharkey, +1 908-439-2200, ext. 5159

Manager, Public Relations

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or

Jim Peavy, +1 908-439-2200, ext. 5644

Director, Public Relations

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