A.M. Best Upgrades Credit Ratings of Cigna Life Insurance New Zealand Limited
December 15 2017 - 12:48PM
Business Wire
A.M. Best has upgraded the Financial Strength Rating to A
(Excellent) from A- (Excellent) and the Long-Term Issuer Credit
Rating to “a” from “a-” of Cigna Life Insurance New Zealand
Limited (CLINZ) (New Zealand). The outlook of these Credit
Ratings (ratings) is stable.
The ratings reflect CLINZ’s balance sheet strength, which A.M.
Best categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management.
The rating upgrades reflect the implicit support CLINZ receives
from its ultimate parent company, Cigna Corporation (Cigna)
(Bloomfield, Connecticut, USA).
CLINZ’s risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), remains solid. The company has
favorable balance sheet liquidity, supplemented by positive
operating cash flows. In addition, the company has maintained a
track record of positive underwriting results and stable investment
income. The company’s five-year average return on net assets is
approximately 7%, and its five-year average return on premium
revenue is 13%.
A partially offsetting rating factor is CLINZ’s underwriting
profitability, which has been under pressure in recent years. This
was due to a combination of factors including deteriorating claims
experience, a higher lapse rate and unfavorable discount rate
movement, although there has been some improvement this year,
according to unaudited results. Additionally, the company is facing
fierce competition in the direct-to-consumer channel and has yet to
create a significant competitive advantage through its distribution
channels.
Additional positive rating actions are unlikely. Negative rating
actions may occur if there is significant deterioration in CLINZ’s
risk-adjusted capitalization due to a high dividend payout or if
the company continues to experience a declining trend of
profitability.
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 A.M. 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 A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20171215005674/en/
A.M. BestSin Yee Chuah, +65 6303 5022Associate
Financial Analystsinyee.chuah@ambest.comorJason Shum,
+65 6303 5020Associate Director,
Analyticsjason.shum@ambest.comorChristopher Sharkey,
+1 908 439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1 908 439 2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com