Fitch Assessments of New Zealand and Australian Life Insurers Highlight FIL’s Struggles
In a recent peer review, Fitch Ratings assessed the positions of New Zealand and Australian life insurers, revealing significant insights into their performance and stability.
Reliance on Parent Institutions
Among New Zealand insurers, Southsure Assurance Limited (SAL) and First Insurance Limited (FIL) exhibit a notable dependence on their parent entities. SAL relies heavily on its parent bank, while FIL is supported by a credit union. This reliance underscores a potential vulnerability in their operational independence.
FIL’s Shrinking Profitability
First Insurance Limited’s position appears particularly precarious within its peer group. According to Fitch Ratings, FIL’s diminishing gross premium base, which is the smallest among its peers, has significantly weakened its profitability. This decline poses challenges for the insurer in maintaining a competitive edge and financial stability.
Moderate Rankings for Australian Insurers
In the Australian market, Fitch Ratings ranked Resolution Life Australasia’s company profile as ‘Moderate.’ This ranking reflects the insurer’s larger operating scale and its strategic focus on managing run-off businesses, which involves handling the existing policies without writing new ones.
Similarly, ClearView received a ‘Moderate’ ranking. This assessment is attributed to ongoing product improvements, a stronger position in the retail life insurance segment, and recent efforts to streamline the business by concentrating on core life insurance operations.
Conclusion
Fitch Ratings’ peer review provides a comprehensive look at the standing of New Zealand and Australian life insurers. While some insurers like Resolution Life Australasia and ClearView are recognized for their stability and strategic initiatives, others like First Insurance Limited face challenges due to shrinking profitability and reliance on parent institutions. These insights are crucial for stakeholders and investors in understanding the competitive landscape and financial health of these insurers.
