AM BEST WITHDRAWS NEW ZEALAND’S BRIGHTSIDECO CREDIT RATINGS

KUALA LUMPUR, March 23 (Bernama) -- United States-headquartered AM Best has removed from under review with negative implications and downgraded the Long-Term Issuer Credit Rating to “bb” (Fair) from “bb+” (Fair) and affirmed the Financial Strength Rating (FSR) of B (Fair) of New Zealand’s Brightsideco Insurance Limited (Brightsideco).

According to the global credit rating agency in a statement, the outlook assigned to these Credit Ratings (ratings) is stable.

Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in the agency’s interactive rating process following exemption by the Reserve Bank of New Zealand from the requirement to have an FSR.

These rating actions are the result of Brightsideco being placed into run-off following the cancellation of its arrangement with the New Zealand operations of Harvey Norman Holdings Limited, a large electrical goods retailer based in Australia, to distribute extended warranty insurance products.

As a result, Brightsideco lacks a competitive position or the ability to alter or re-price its book of business, and in AM Best’s view, has a weaker business profile.

The ratings reflect Brightsideco’s balance sheet strength, which AM Best assessed as adequate, as well as its marginal operating performance, very limited business profile and appropriate enterprise risk management.

Brightsideco’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which AM Best expects to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio.

As insurance liabilities run off, risk-adjusted capitalisation is expected to improve further; insurance risk is projected to reduce faster than the company’s capital base. Other balance sheet considerations include Brightsideco’s very small absolute capital base, which increases its sensitivity to weaker-than-anticipated performance.

Furthermore, the balance sheet strength assessment factors a negative holding company impact arising from Brightsideco’s ultimate parent, ICF Holdings Pty Ltd, following an assessment of consolidated risk-adjusted capitalisation.

-- BERNAMA