SINGAPORE--(BUSINESS WIRE)--#insurance--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of �bbb-� (Good) of New Zealand Medical Indemnity Insurance Limited (NZMII) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect NZMII�s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

NZMII�s balance sheet strength is underpinned 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). Partially offsetting balance sheet strength factors include the company�s limited financial flexibility and its small absolute capital base, which increases the sensitivity of capital adequacy to shock events.

AM Best also views NZMII�s operating performance as adequate, as demonstrated by a five-year average return-on-equity ratio of 11.3 % (fiscal years 2017-2021). Following a period of unfavourable claims experience in fiscal years 2018 and 2019, NZMII�s underwriting performance improved over the past two fiscal years as a result of remedial actions taken by management, including premium rate adjustments. In addition, technical performance improvements were in part aided by lower claims frequency driven by COVID-19 related movement restrictions. Overall earnings are supported by NZMII�s robust investment income with the company having reported a five-year average net investment yield (including gains) of 5.2% (fiscal year 2017-2021).

AM Best views NZMII�s business profile as limited given its position as a small and niche insurer in New Zealand focused on providing medical indemnity insurance to medical practitioners and health professionals. The company�s claims largely consist of legal fees, excluding medical injury costs. As a monoline insurer with operations in a single country, the company is viewed to have limited geographic and product diversification. Access to new business is supported by its affiliation with the New Zealand Resident Doctors� Association. In fiscal year 2021, NZMII changed its name from New Zealand Medical Professionals Limited.

NZMII�s ERM is viewed as appropriate given the size and complexity of its operations. The company has moderate exposure to operational risks, as it has outsourced most of its operations to third-party service providers. However, the company�s management has taken suitable measures to mitigate this risk including using high quality providers and contract arrangements to ensure the continuity of services.

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.

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Contacts

Yi Ding
Senior Financial Analyst
+65 6303 5021
[email protected]

Kanika Thukral
Senior Financial Analyst
+65 6303 5025
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
[email protected]