AM Best Affirms Credit Ratings of Pinnacle Life Limited
May 01 2024 - 11:02AM
Business Wire
AM Best has affirmed the Financial Strength Rating of B+
(Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of
Pinnacle life Limited (Pinnacle Life) (New Zealand). The outlook of
these Credit Ratings (ratings) is stable.
The ratings reflect Pinnacle Life’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 (ERM). The ratings also factor in a
neutral impact from the company’s ultimate parent, Greenstone
Holdco Pty Limited (Greenstone).
Pinnacle Life’s balance sheet strength is underpinned by its
risk-adjusted capitalisation, which was at the strongest level at
fiscal year-end 2023, as measured by Best’s Capital Adequacy Ratio
(BCAR), and is expected to remain at that level. The company’s
balance sheet strength assessment also reflects its robust
regulatory solvency and the financial flexibility supported by its
parent, Greenstone. The balance sheet strength assessment also has
factored in the company’s high reliance on third-party reinsurance
and small capital base, which increase the sensitivity of capital
adequacy to new business growth, changes in the interest rate
environment, and shock events.
AM Best assesses Pinnacle Life’s operating performance as
adequate, with a five-year average return-on-equity ratio of 5.3%
(fiscal years 2019-2023). The company’s operating result has been
driven by the adequate underwriting performance of its in-force
life business, coupled with investment returns. Overall earnings
over the past five years have exhibited moderate volatility, mainly
due to interest rate movements. Prospectively, operating
performance is expected to remain adequate while the company
executes its growth plan, supported by robust underwriting growth
and an appropriate pricing strategy over the medium term, while
leveraging the expertise of Greenstone to manage the associated
underwriting risks.
AM Best assesses Pinnacle Life’s business profile as limited,
largely reflecting the company’s small scale of operations and its
low product and geographic diversification in New Zealand. Key
product offering focused on mortality products, including yearly
renewable term life and funeral insurance. Greenstone has become a
key distribution partner and growth driver of Pinnacle Life. The
remaining business was written by Pinnacle Life’s direct channel,
in which 90% was sold through online channels in fiscal year
2023.
AM Best assesses Pinnacle Life’s ERM as appropriate given the
size and complexity of the company’s current operations. The
significant business growth is expected to introduce additional
risks to the company’s operations, though this will be mitigated
partially by leveraging Greenstone’s expertise in product
development and underwriting. While AM Best considers Pinnacle
Life’s risk management capabilities as appropriate for its key
risks, continual development is expected as the company expands its
scope of operations.
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 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper use of Best’s
Credit Ratings, Best’s Performance Assessments, Best’s
Preliminary Credit Assessments and AM Best press releases, please
view Guide to Proper Use of Best’s 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.
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Ken Lau Senior Financial Analyst +65 6303
5025 ken.lau@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Victoria Ohorodnyk Director, Analytics +65 6303
5020 victoria.ohorodnyk@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com