According to a statement, the upgrade results in a stable outlook of these credit ratings as well as reflects an improvement in AM Best’s assessment of LIL’s business profile.
The ratings reflect LIL’s balance sheet strength, which AM Best described as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.
While the company remains a new entrant to New Zealand’s life insurance market having launched its underwriting operations in 2016, it continues to execute on its initial start-up business strategy successfully.
LIL’s core product offering is variable annuity products for the retirement community, which although remains in the early stage of its product life cycle in New Zealand, has demonstrated a good level of traction and growth over recent years.
The company’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which is projected to be at least at a strong level over the medium term.
AM Best expects LIL’s prospective capital position to be supported by ongoing, timely capital injections from the group’s shareholders to support future business growth.
The ratings also factor in a neutral holding company impact from the company’s 100 per cent ownership by Retirement Income Group Limited.
AM Best views LIL to have a limited track record of positive operating performance and its earnings have been hampered historically by high expenses relative to the size of its premium base due to its start-up nature.
-- BERNAMA
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