A.M. Best Affirms Credit Ratings of The Hollard Insurance Company Pty Ltd

HONG KONG--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of The Hollard Insurance Company Pty Ltd (HIC) (Australia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect HIC’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

HIC’s level of balance sheet strength is reflective mainly of its equity investments and moderate underwriting leverage. In addition, A.M. Best expects HIC to remain consistently profitable, based on a product portfolio that includes mostly pet health insurance, as well as domestic home and motor insurance in Australia. Relative to its historical average, HIC has performed modestly in recent years, largely owing to poor claims experience as a result of catastrophes and slower-than-expected growth in certain lines of business. Nevertheless, A.M. Best believes the company’s focus on profitable growth, along with its remedial underwriting actions, will help it maintain positive overall earnings on an ongoing basis.

As a niche insurer, HIC has a market share of less than 2% in Australia. Nevertheless, the company has good market positions in some niche segments within its domestic insurance market, primarily in short-tail insurance products. In addition, HIC has established a diversified network of distribution partners, which allows it to pursue further growth across different products and channels, in personal and commercial lines business.

A.M. Best’s assessment that HIC’s ERM is appropriate is based on the company’s current size and risk profile. Despite a complex business model, HIC has demonstrated an overall good ability to address most of its risks, primarily through underwriting, risk selection, reinsurance and sound operating controls. Therefore, A.M. Best considers HIC’s risk management capabilities to be aligned appropriately with its risk profile.

Key factors that could lead to negative rating actions include inadequate product pricing that results in material deviations from the expected improvement in operating performance or risk-adjusted capitalization. Additionally, downward ratings pressure may arise if there is diminished capital support from HIC’s parent entities.

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.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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A.M. Best

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Associate Director, Analytics

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Chi-Yeung Lok, +65 6303 5016

Director, Analytics

chi-yeung.lok@ambest.com

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

Director, Public Relations

james.peavy@ambest.com

Source: A.M. Best