Credit rating agency AM Best has affirmed its ratings on New Zealand Post's Kiwi Insurance Ltd, Kiwibank's sister company, and maintained a stable outlook.
AM Best has a financial strength rating of A- (Excellent) and issuer credit rating of “a-”on Kiwi Insurance, both with stable outlooks. AM Best said that, based on Kiwi Insurance's business plan, capital was expected to remain in excess of solvency requirements for the next 36 months.
However, a significant reduction in NZ Post's stores, marketing budget and shared resources, could negatively impact Kiwi Insurance’s business generation. NZ Post is undertaking cost cutting that could see some Post Shops closed.
AM Best describes its Financial Strength Rating as an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations. Its Issuer Credit Rating is described as an independent opinion of an issuer/entity's ability to meet its ongoing senior financial obligations.
See full details of AM Best's credit ratings here and see credit ratings explained here.
Here's AM Best's full statement
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Kiwi Insurance Limited (Kiwi) (New Zealand). The outlook for both ratings is stable.
The affirmations reflect Kiwi’s status as a member of the New Zealand Post Limited (NZPL) group of companies and its balance sheet strength.
Financial services, including Kiwi’s bancassurance business, remain a strategic growth area for the NZPL group. This provides Kiwi with access to its affiliates’ nationwide store network and representation among its senior management (such as Kiwibank Limited), which supports Kiwi’s distribution and branding. Balance sheet strength, as measured by Best’s Capital Adequacy Ratio (BCAR), is expected to remain supportive of its ratings, with capital remaining in excess of solvency requirements over the next 36 months, according to the company’s current business plan.
Offsetting rating factors include risks to Kiwi’s profitability. As the company transitions to becoming a self-supporting bancassurer, costs are incurred to handle self-manufactured products before budgeted volumes have materialized. Until this occurs, at least temporarily, Kiwi’s profitability could be lower, with a corresponding impact on its BCAR.
Kiwi remains reliant on its affiliates for distribution and branding. Cost rationalization, resulting in a significant reduction of NZPL group’s store network, marketing budget and shared resources could negatively impact Kiwi’s business generation.
Kiwi is well positioned to maintain its current ratings. A significant deterioration in its BCAR could lead to downward pressure on the ratings.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.