SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Momentum Life Limited (Momentum Life) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
As a start-up insurer, having commenced risk-bearing operations for the first time in March 2018, Momentum Life has a limited track record of operation. Consequently, AM Best’s assessment of the company’s rating fundamentals is principally forward looking in nature.
The ratings reflect Momentum Life’s balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). In addition, the ratings factor in a neutral impact from the company’s 100% ownership by BlueInc Group Pty Limited (BlueInc Group).
Momentum Life’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is expected to remain at the strongest level over the medium term. Despite high forecast underwriting growth during the company’s start-up phase driving increasing capital requirements, AM Best expects available capital to remain sufficient to offset this planned business expansion. Partially offsetting balance sheet factors include Momentum Life’s very small absolute capital base, which increases its sensitivity to stressed scenarios, as well as its high reliance on third-party reinsurance for risk transfer and upfront commission financing.
AM Best considers Momentum Life’s operating performance to be adequate, with positive and gradually improving return on equity ratios expected over the medium term. At present, the company’s underwriting performance is hampered partially by a high expense ratio, given its small premium base; however, this is expected to improve as the business continues to expand. AM Best views Momentum Life’s business profile as limited, reflecting the company’s start-up nature and its concentration to New Zealand’s life insurance sector. The products offered by Momentum Life include guaranteed acceptance funeral insurance and lump-sum life insurance products, which are considered to have low product risk.
AM Best views Momentum Life’s ERM as appropriate given the size and complexity of the company’s operations at present. Over the medium term, Momentum Life’s risk management capability will likely need to develop in order to support increasing operational scale and a widening of its product offerings.
Momentum Life receives no rating enhancement or drag from BlueInc Group. Momentum Life benefits from operational support provided by its parent and other subsidiaries of the group.
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.
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