AM Best Affirms New Zealand’s Pinnacle Life Credit Ratings

KUALA LUMPUR, May 2 (Bernama) -- Global credit rating agency, AM Best has affirmed New Zealand’s Pinnacle Life Limited (Pinnacle Life) financial strength rating of B+ (Good) and the long-term issuer credit rating of “bbb-” (Good).

In a statement, AM Best said these credit ratings (ratings) which have a stable outlook reflected Pinnacle Life’s balance sheet strength, which was assessed 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, and is expected to remain at that level.

The company’s balance sheet strength assessment also reflects its robust regulatory solvency and has factored in the company’s high reliance on third-party reinsurance and small capital base, in addition to the financial flexibility supported by its parent, Greenstone.

The credit rating agency assesses Pinnacle Life’s operating performance as adequate, with a five-year average return-on-equity ratio of 5.3 per cent (fiscal years 2019-2023), with its operating result driven by the adequate underwriting performance of its in-force life business, coupled with investment returns.

Meanwhile, its business profile, viewed as limited, largely reflects the company’s small scale of operations and its low product and geographic diversification in New Zealand, with key product offerings 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 per cent was sold through online channels in fiscal year 2023.

Pinnacle Life’s ERM was assessed as appropriate given the size and complexity of the company’s current operations. While AM Best considers its risk management capabilities as appropriate for its key risks, continual development is expected as the company expands its scope of operations.

-- BERNAMA