SINGAPORE--(BUSINESS WIRE)--A.M. Best has revised the outlooks to stable from negative and affirmed the financial strength rating (FSR) of B+ (Good) and the issuer credit rating (ICR) of “bbb-” of New Zealand Local Government Insurance Corporation Limited (New Zealand), trading as Civic Assurance (Civic).
The revised outlooks for the FSR and ICR mainly reflect Civic’s substantial reduction of reinsurance counterparty risk following the settlement of Canterbury earthquake claims between Christchurch City Council, Civic and its panel of reinsurers.
Civic’s risk-adjusted capitalization, as determined by Best’s Capital Adequacy Ratio (BCAR), is strongly supportive of the current ratings. In addition, Civic’s non-insurance income, being a steady stream of administrative fee and investment income, is projected to fully cover its operating expenses and post a moderate profit on an ongoing basis.
An offsetting factor in Civic’s rating assessment is its diminished business profile, reflective of a company that has not issued any new insurance policies for a number of years. As a result, Civic’s business continues to reflect only outstanding claims reserves and no reported premium revenue Additionally, uncertainty and material execution risk exist with regard to the company’s future operating plan as a small insurer targeting to underwrite relatively high limit policies.
Negative rating actions could occur should there be a significant deterioration in Civic’s capitalization or liquidity drain due to unexpected increase in expenses or capital repatriation.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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