SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Youi NZ Pty Limited (Youi NZ) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Youi NZ’s strong balance sheet, which is due to the company’s low underwriting leverage, as well as its prudent reinsurance program and conservative investment approach. In addition, actual claims experience during the company’s first three years of operation were largely consistent with the assumptions used in pricing its policies.
Partially offsetting these positive rating factors is Youi NZ’s high expense ratio, which is due to the company having a small premium base from which to cover its operating expenses. Additionally, Youi NZ’s ceded reinsurance leverage ratio (the sum of outward reinsurance expense and reinsurance assets divided by net assets) is over 100%, which suggests a high level of dependence on reinsurance.
While positive rating actions are unlikely in the near term, a material decline in Youi NZ’s risk-adjusted capitalization, due to a failure to meet its projected underwriting performance, may trigger negative rating actions.
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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