SINGAPORE–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Chubb Life Insurance New Zealand Limited (Chubb Life NZ) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Chubb Life NZ’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. The ratings also factor in rating enhancement from the company’s parent and support from Chubb Limited (Chubb).
Chubb Life NZ’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which was at the strongest level at year-end 2022 and is expected to remain at this level over the medium term. This reflects the company’s moderate underwriting leverage and conservative investment allocation. In addition, the company continues to manage its regulatory solvency position with a robust buffer over the minimum regulatory requirements. Following the implementation of the Interim Solvency Standard (ISS) on 1 January 2023, the company will be reporting under the new solvency standards. Chubb Life NZ expects its solvency margin to be more volatile under the ISS mainly due to the new grouping requirements of insurance products in calculating insurance risk capital charge. The company therefore increased its target surplus and is reducing the target duration of its fixed income investments to cope with the changes in capital requirements.
AM Best views Chubb Life NZ’s operating performance as adequate, as demonstrated by a five-year average return-on-equity ratio of 1.3% (fiscal years 2018-2022). Operating results in fiscal years 2021 and 2022 were dampened by interest rate hikes, which negatively impacted the fair values of company’s investment portfolio and net insurance assets. Prospectively, AM Best expects steady revenue growth, and a robust pricing strategy to sustain Chubb Life NZ’s adequate operating performance.
AM Best views Chubb Life NZ’s business profile as neutral. Chubb Life NZ ranks among New Zealand’s largest life insurance companies in terms of gross earned premiums. The company’s product range includes term life, disability income, trauma and funeral insurance. Chubb Life NZ’s competitive advantage arises from its multi-channel distribution approach, particularly benefitting from a bancassurance distribution agreement with ANZ Bank New Zealand Limited and its adviser channel.
The rating enhancement from its parent company reflects integration with and ownership by Chubb, as well as implicit and explicit support from the Chubb group. For example, the group has demonstrated its support by providing reinsurance protection with its affiliate and actively overlooking its strategy. While Chubb Life NZ accounts for a small component of the Chubb group’s overall revenues and earnings, AM Best views the acquisition of Chubb Life NZ as expanding the group’s presence in New Zealand.
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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