AM Best Affirms Credit Ratings of Provident Insurance Corporation Limited

Business Wire

SINGAPORE--(BUSINESS WIRE)--
AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Provident Insurance Corporation Limited (PICL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect PICL’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

PICL’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strongest level as of fiscal year-end (31 March) 2025, as measured by Best’s Capital Adequacy Ratio (BCAR). Prospectively, AM Best expects PICL’s risk-adjusted capitalisation to remain at least at the very strong level, taking into account the recently completed share redemption and business growth targets. Other supporting balance sheet strength factors include the company’s conservative investment strategy and robust regulatory solvency position. An offsetting balance sheet strength factor is the company’s exposure to long-duration policies that increase reserving risk; however, PICL takes a prudent reserving approach and has a history of reserve adequacy.

AM Best assesses PICL’s operating performance as adequate, supported by its track record of underwriting profits and positive investment returns. PICL has made significant investments in its information technology and pricing capabilities in recent periods to support its next phase of accelerated growth, which resulted in elevated expense ratios in recent years. In fiscal-year 2025, the company reported a combined ratio (net/net, IFRS 17) of 96.9% and a return-on-equity of 13.4%, as calculated by AM Best. Investment income remains a stable component of the company’s overall profits, with a reported net investment yield (including gains/losses) of 5.6% in fiscal-year 2025.

AM Best assesses PICL’s business profile as limited. This reflects its relatively modest scale of operations and limited geographical diversification, with all business emanating from New Zealand. PICL is a niche insurer that focuses on mechanical breakdown insurance and private motor vehicle insurance, largely distributed through motor dealerships and distribution partners across its domestic market. PICL is exposed to a moderate level of pricing risk arising from its multi-year policies, largely its mechanical breakdown insurance.

AM Best assesses PICL’s ERM as appropriate, given the size and complexity of its operations. AM Best views the successful execution of the company’s growth plan to be an ongoing risk. To date, this risk has been mitigated through investments in internal capabilities and technology. Prospectively, AM Best expects PICL’s risk management capability to continue to develop and strengthen, supporting its increasing operational scale.

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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.