AM Best Affirms Australia’s Pacific Credit Ratings
KUALA LUMPUR, March 24 (Bernama) -- AM Best has affirmed Australia’s Pacific International Insurance Pty Limited (Pacific) financial strength rating of B++ (Good) and the long-term issuer credit rating of “bbb” (Good), with a stable outlook.
The credit ratings (ratings) reflect Pacific’s strong balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management (ERM). The assessment also factors in a neutral impact from its ultimate owner, Badger Mutual Wealth (Pty) Ltd, an insurance group domiciled in South Africa.
In a statement, AM Best said it upgraded Pacific’s balance sheet strength from adequate to strong, reflecting risk-adjusted capitalisation at the strongest level as of fiscal year-end June 30, 2025, measured by Best’s Capital Adequacy Ratio.
The company is expected to maintain strong capitalisation, supported by positive earnings generation and robust financial flexibility, including a history of capital injections. Moderate dependence on reinsurance is partly offset by the sound credit quality of its reinsurance panel.
Operating performance is assessed as adequate. Over the past five fiscal years, Pacific’s performance has improved steadily. In fiscal year 2025 (FY 2025), the company reported a net/net combined ratio of 95.2 per cent under IFRS 17 and a return on equity of 16.6 per cent, supported by solid underwriting results and stable investment income, while investment returns contributed a net yield of 6.2 per cent in FY 2025.
Pacific’s business profile is considered limited, reflecting its growing but relatively modest operational scale. Recent premium growth has been elevated, with a significant portion ceded to reinsurers.
Its net retained portfolio includes motor, pet, travel insurance, and a motor novated lease partnership. Medium-term net underwriting growth is expected to remain elevated.
The company’s ERM is deemed appropriate for the company’s size and complexity, with ongoing strengthening expected to support operational expansion. Regulatory compliance remains a focus, particularly given developments in Australia and New Zealand.
Following a 2024 review by the Australian Prudential Regulation Authority, Pacific remains on track to complete its remediation programme under regulator oversight by 2026.
-- BERNAMA