SINGAPORE, March 1 (Bernama-BUSINESS WIRE)– AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of FMG Insurance Limited (FMGIL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect FMGIL’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings factor in a neutral holding company impact from the company’s 100% ownership by Farmers’ Mutual Group (FMG).
FMGIL’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite a weakened regulatory capital position as of fiscal year-end (31 March) 2023 as a result of an operating loss, the company continues to demonstrate prudent capital management to support its capital needs. FMGIL is considered to have a comprehensive reinsurance programme that provides protection against high-severity modelled catastrophe events in New Zealand. AM Best views the company’s investment portfolio to be of moderate risk with a focus on cash and high-quality fixed-income securities, albeit with some exposure to equities. A partially offsetting balance sheet strength factor is the company’s limited financial flexibility, given its ultimate ownership by FMG, a mutual organisation.