SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Partners Life Limited (Partners Life) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Partners Life’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Partners Life’s balance sheet strength assessment is supported by its risk-adjusted capitalisation, which is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best also views Partners Life as having strong financial flexibility, as demonstrated by a track record of capital contributions from shareholders to support planned new business growth. Partners Life’s regulatory solvency has demonstrated some sensitivity to growth initiatives over recent years; however, AM Best expects prospective regulatory solvency to remain at a robust level over the medium term, supported by timely capital support from shareholders and full earnings retention. A partially offsetting balance sheet factor remains the company’s high reliance on reinsurance for risk transfer and upfront commission financing.
Partners Life has a track record of adequate operating performance, with a five-year average return-on-equity ratio of 10.6% (fiscal-years 2015-2019). The company’s positive operating results have been driven by the favourable underwriting performance of its in-force life business, coupled with robust investment returns. Nonetheless, operating profitability remains sensitive to prevailing market conditions in New Zealand, which have caused some volatility in claims experience in recent periods. Prospectively, AM Best expects controlled underwriting growth and robust pricing strategies to support the maintenance of Partners Life’s adequate operating performance.
Partners Life’s business profile assessment reflects its prominent position in New Zealand’s life insurance industry, with a market share of approximately 10% based on 2019 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, disability income, trauma, total permanent disability and medical products. Partners Life’s business expansion has been supported by robust relationships with a large network of independent financial advisers (IFA) in New Zealand. While noting the diversity among its IFA network, AM Best considers Partners Life’s business model to be subject to a level of concentration risk arising from the reliance on a single distribution channel.
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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