A.M. Best Affirms Credit Ratings of Provident Insurance Corporation Limited
The ratings reflect PICL’s balance sheet strength, which
The company’s balance sheet strength assessment is underpinned by risk-adjusted capitalization that
PICL’s operating performance since inception has been hampered by its start-up nature and in particular its high operating expenses relative to earned premiums. However, the company has reported consistently strong loss ratio experience on its core portfolio of mechanical breakdown insurance and credit contract indemnity products. Modest operating profits were reported in 2017 and 2018, with the additional business generated by the Co-op Insurance NZ acquisition expected to further support a reduction in PICL’s expense ratio in 2019. Consequently, the company is expected to report strong combined ratios and robust operating profits over the next three years (2019-2021).
Positive rating movements are unlikely in the near term. However, negative rating pressure could arise from a weakening of PICL’s risk-adjusted capitalization, for example, due to weaker-than-expected performance from the company’s existing portfolio or the acquired Co-op Insurance NZ business.
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
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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