AM Best Affirms Credit Ratings of Veterinary Professional Insurance Society Incorporated
17 Julio 2024 - 9:35AM
Business Wire
AM Best has affirmed the Financial Strength Rating of B
(Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of
Veterinary Professional Insurance Society Incorporated (VPIS) (New
Zealand). The outlook of these Credit Ratings (ratings) is
stable.
The ratings reflect VPIS’ balance sheet strength, which AM Best
assesses as adequate, as well as its adequate operating
performance, limited business profile and appropriate enterprise
risk management.
VPIS’ balance sheet strength assessment is underpinned by its
risk-adjusted capitalisation being at the strongest level, as
measured by Best’s Capital Adequacy Ratio (BCAR). Despite this, AM
Best considers VPIS to have a low regulatory solvency margin
compared with its peers. This follows a significant increase in
VPIS’ regulatory solvency requirement in fiscal year 2023, as a
result of losing its regulatory small insurer status. Other
offsetting balance sheet strength considerations include limited
financial flexibility, and a small absolute capital base (NZD 3.5
million as of 30 September 2023), which increases the sensitivity
of VPIS’ capital adequacy to stress scenarios. Whilst VPIS’
reinsurance programme protects the organisation against large
single losses and aggregate exposure, AM Best views the
organisation as having a high reliance on reinsurance.
AM Best assesses VPIS’ operating performance as adequate, with a
five-year average return-on-equity ratio of 4.0% (fiscal years 2019
– 2023). The organisation typically records an elevated combined
ratio, which is reflective of its pricing strategy as a
not-for-profit members’ society. VPIS’ expense ratio is heightened
when compared with the industry average as a result of its size and
investment in technology in recent years. Investment income remains
a key driver of the organisation’s operating performance, with a
five-year average net investment yield (including gains/losses) of
4.0% (fiscal years 2019 – 2023).
VPIS is a not-for-profit organisation that provides
predominantly professional indemnity insurance to veterinarians in
New Zealand. The business profile assessment of limited reflects
VPIS’ small-scale operations, niche product focus and high
geographic concentration. Nonetheless, VPIS has a dominant market
position in its targeted segment, supported by its highly
specialised knowledge and experience in New Zealand’s veterinary
industry.
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 Guide to Best’s
Credit Ratings. For information on the proper use of Best’s Credit
Ratings, Best’s Performance Assessments, Best’s Preliminary Credit
Assessments and AM Best press releases, please view Guide to Proper
Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specialising in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Yun Chee Associate Financial Analyst +65 6303
5019 yun.chee@ambest.com Christopher Sharkey
Associate Director, Public Relations +1 908 882 2310
christopher.sharkey@ambest.com Yi Ding Senior Financial
Analyst +65 6303 5021 yi.ding@ambest.com Al
Slavin Senior Public Relations Specialist +1 908 882
2318 al.slavin@ambest.com