SINGAPORE–(BUSINESS WIRE)–AM Best has assigned a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of �bb+ (Fair) to Veterinary Professionals Insurance Society Incorporated (VPIS) (New Zealand). The outlook assigned to 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, as measured by Bests Capital Adequacy Ratio (BCAR), which is at the strongest level. As a result of a significant increase in VPIS regulatory solvency requirement in the near term, its regulatory solvency position is expected to weaken but remain above the regulatory minimum. In addition, the company has a small absolute capital base of NZD 3.3 million and limited financial flexibility, which increases the sensitivity of its capital adequacy to stress scenarios. Whilst VPIS reinsurance programme protects the company against large single losses and aggregate exposure, the company is viewed to have high reliance on reinsurance.
AM Best views VPIS operating performance to be adequate, with a five-year average return-on-equity ratio of 6.5% (fiscal years 2017-2021). This is supported by the companys sound underwriting performance, although the combined ratio exhibited elevated volatility over this period. 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 companys operating performance, with a five-year average net investment yield (including gains/losses) of 5.1% (fiscal years 2017-2021).
VPIS is a not-for-profit organisation that provides predominantly professional indemnity insurance to veterinarians in New Zealand. The companys business profile assessment of limited reflects its small-scale operations, niche product focus and high geographic concentration. However, VPIS has a dominant market position in its targeted segment, supported by its highly specialised knowledge and experience in New Zealands 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 Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Bests Credit Ratings. For information on the proper use of Bests Credit Ratings, Bests Performance Assessments, Bests Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Bests 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.
Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
Contacts
Yi Ding
Senior Financial Analyst
+65 6303 5021
yi.ding@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Michael Dunckley, CFA
Director, Analytics
+65 6303 5020
michael.dunckley@ambest.com
Jeff Mango
Managing Director,
Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com
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