AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) of Beneficial Insurance Limited (Beneficial) (New Zealand). The outlook of the FSR is stable, while the outlook of the Long-Term ICR is positive.

The Credit Ratings (ratings) reflect Beneficial’s balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

The positive Long-Term ICR outlook reflects AM Best’s expectation that Beneficial’s balance sheet strength rating fundamentals will continue to strengthen over the medium term, with internal profit generation and retention that supports growth in the company’s absolute capital base, while maintaining its strong operating performance, as the company executes its business strategy.

Beneficial’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strongest level as of 31 March 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). This reflects Beneficial’s moderate net underwriting leverage and conservative investment strategy. The company’s risk-adjusted capitalisation is expected to remain at the strongest level, supported by internal retention of earnings over the medium term. Partially offsetting these balance sheet strength factors is the company’s small absolute capital base, which is viewed to be susceptible to volatility in stress scenarios and to changes in future performance. AM Best’s balance sheet strength analysis also incorporates a neutral holding company impact following an assessment of consolidated risk-adjusted capitalisation at Beneficial’s parent, Beneficial Holdings Limited.

Beneficial reported a return-on-equity ratio of 36.1% in fiscal-year 2024, which is in line with its track record of strong operating performance. The company’s overall profitability is driven by the favourable underwriting performance of its core pet insurance portfolio. AM Best expects Beneficial to maintain strong operating performance over the medium term, benefiting from sustained low loss ratios and positive investment income.

AM Best views Beneficial’s business profile to be limited, largely reflecting the company’s small-scale operations and its limited product and geographic diversifications. The company is a niche insurer with a good market presence in the pet insurance sector in New Zealand, albeit maintaining a small overall market share in the domestic general insurance industry. The company's product risk profile is considered low given its focus on pet insurance, which is generally less exposed to large losses and catastrophe events.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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