AM BEST AFFIRMS PACIFIC INTERNATIONAL INSURANCE CREDIT RATINGS AS GOOD

KUALA LUMPUR, March 1 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of “bbb” (Good) of Australia’s Pacific International Insurance Pty Limited (Pacific).

The outlook of these credit ratings (ratings) is stable, reflecting Pacific’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.

According to AM Best in a statement, these ratings also factor in a neutral impact from Pacific’s ultimate owner, Badger Mutual Wealth (Pty) Ltd (the Badger group), an insurance group domiciled in South Africa.

The company’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation, which was at the strong level in fiscal-year ending June 30, last year, as measured by Best’s Capital Adequacy Ratio.

Prospective risk-adjusted capitalisation is expected to remain at least at the strong level over the medium term. However, Pacific’s capital adequacy remains sensitive to the successful execution of its business plan, which includes its performance targets and projected capital generation.

The credit rating agency views Pacific’s operating performance as adequate, with its operating performance exhibited a notable positive trend over the last five years, recording a five-year average return-on-equity ratio of negative 0.2 per cent (fiscal-years 2019-2023).

Following the Badger group’s acquisition in fiscal-year 2018, Pacific recorded elevated expenses due to significant investments in marketing and infrastructure. Nevertheless, as a result of increased operational scale and cost saving initiative in recent years, the company reported positive earnings in both fiscal-years 2022 and 2023.

Pacific’s net retained insurance portfolio predominantly consists of motor and a motor novated lease partnership with an insurance distributor, hence AM Best expects the company’s net underwriting growth to be elevated over the medium term, driven by pet cover and travel lines of business.

-- BERNAMA