A.M. Best Upgrades Credit Ratings of Cigna Life Insurance New Zealand Limited
The ratings reflect CLINZ’s balance sheet strength, which
The rating upgrades reflect the implicit support CLINZ receives from its ultimate parent company, Cigna Corporation (Cigna) (
CLINZ’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains solid. The company has favorable balance sheet liquidity, supplemented by positive operating cash flows. In addition, the company has maintained a track record of positive underwriting results and stable investment income. The company’s five-year average return on net assets is approximately 7%, and its five-year average return on premium revenue is 13%.
A partially offsetting rating factor is CLINZ’s underwriting profitability, which has been under pressure in recent years. This was due to a combination of factors including deteriorating claims experience, a higher lapse rate and unfavorable discount rate movement, although there has been some improvement this year, according to unaudited results. Additionally, the company is facing fierce competition in the direct-to-consumer channel and has yet to create a significant competitive advantage through its distribution channels.
Additional positive rating actions are unlikely. Negative rating actions may occur if there is significant deterioration in CLINZ’s risk-adjusted capitalization due to a high dividend payout or if the company continues to experience a declining trend of profitability.
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 © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
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