SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Union Medical Benefits Society Limited (UniMed) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect UniMed’s strong risk-adjusted capitalization and favorable operating performance over the past five years. UniMed’s strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is due to its low underwriting leverage, high capital quality and favorable liquidity position. In addition, the company has a good performance track record, with an average operating ratio of approximately 89% over the past five years. It has a competitive expense ratio of 11% due to its distribution model, which relies more on the direct channel with lower acquisition expenses than on intermediaries, as well as lower administrative costs for group business.
An offsetting rating factor is the company’s premium concentration risk among a few large group accounts. This could make the company’s underwriting performance relatively more vulnerable to competitive pressure.
While positive rating actions are unlikely, negative rating actions may occur if there is a major underwriting deficit or significant deterioration in risk-adjusted capitalization.
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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