AM Best Upgrades Credit Ratings of Partners Life Limited

Business Wire

SINGAPORE--(BUSINESS WIRE)-- AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” from “bbb+” of Partners Life Limited (Partners Life) (New Zealand). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

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

The rating upgrades reflect an improvement in AM Best’s assessment of the company’s business profile. Partners Life has grown to become one of the top five largest life insurers in New Zealand, with a market share of approximately 10% in 2018, based on in-force gross written premiums. Established in 2010, the company remains a relatively new entrant to the domestic life insurance market; however, continues to execute its business strategy of rapid growth and increasing market penetration. The company’s product range includes term life, income protection, trauma, medical and disability insurance, with business expansion supported by its robust relationships with a large network of independent financial advisers in New Zealand.

AM Best expects Partners Life’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), to remain at the strongest level over the medium term. AM Best also views Partners Life as having strong financial flexibility, as demonstrated by a track record of capital support from shareholders to enable high business growth over recent years. In particular, a series of capital injections totaling NZD 200 million between fiscal-year 2017 to 2019 from its largest shareholder, the Blackstone Group, significantly bolstered the company’s shareholders’ equity. The capital injections also strengthened the company’s local regulatory solvency position, which helps support planned business growth over the medium term. A partially offsetting balance sheet factor is the company’s high reliance on reinsurance for risk transfer and upfront commission financing.

AM Best considers Partners Life’s operating performance to be adequate, with a five-year average return on equity ratio of 9% (fiscal-years 2014 to 2018). While the size of Partners Life’s in-force portfolio has continued to grow notably over recent years, claims experience has remained broadly in line with the company’s expectations. Furthermore, effective April 1, 2018, Partners Life entered into a multi-year reinsurance contract that supports the upfront financing of commissions arising from new business. Over the medium term, AM Best expects operating performance to remain at an adequate level.

AM Best views Partners Life’s ERM framework to be appropriate given the size and complexity of its operations. As a result of Partners Life’s rapid expansion over recent years, through the independent financial adviser channel, the company is viewed to have moderate levels of strategic, distribution and concentration risks.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.