A.M. Best Affirms Credit Ratings of The Hollard Insurance Company Pty Ltd

21-Jan-2017 Intellasia | BusinessWire | 12:28 AM Print This Post

SINGAPORE–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of The
Hollard Insurance Company Pty Ltd
(HIC) (Australia). The outlook of
these Credit Ratings (ratings) is stable.

The ratings reflect HIC’s strong risk-adjusted capitalization, as
measured by Best’s Capital Adequacy Ratio (BCAR), and good operating

HIC’s strong risk-adjusted capitalization is reflective mainly of its
moderate underwriting leverage and the financial support provided by its
parent entities, including capital infusions, hybrid capital and
contingent capital facilities. In addition, A.M. Best expects HIC to
remain consistently profitable, based on a product portfolio that
includes mostly pet health insurance, as well as domestic home and motor
insurance in Australia. Over the past five years, the company earned an
average return on capital of approximately 11%.

Partially offsetting these strengths is HIC’s low capital quality, which
is due to its relatively strong dependency on reinsurance.

As a medium-sized insurer, HIC writes a significant volume of business
relative to its capital size, which results in a high gross underwriting
leverage. In addition, while HIC cedes over 25% of its gross premiums
and reserves to reinsurers, the company’s ceded reinsurance leverage is
also elevated. As of June 30, 2016, its ceded reinsurance leverage ratio
(the sum of reinsurance expenses and reinsurance assets divided by net
assets) was almost 200%, which suggests a very high level of dependence
on reinsurance.

Key factors that could lead to negative rating actions include
inadequate product pricing that results in material deviations from the
expected improvement in operating performance or risk-adjusted
capitalization. Additionally, the ratings may experience downward
pressure if there is diminished support from the company’s parent
entities in terms of capital.

Ratings are communicated to rated entities prior to publication. Unless
stated otherwise, the ratings were not amended subsequent to that

This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best’s
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best’s Credit Ratings

A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its
subsidiaries. ALL RIGHTS RESERVED.


A.M. Best
Jason Shum, +65 6589 8400, ext. 217
Financial Analyst

[email protected]
Lee, +65 6589 8400, ext. 210

Managing Director, Analytics
[email protected]
+1 908 439 2200, ext. 5159
Manager, Public

[email protected]
Peavy, +1 908 439 2200, ext. 5644

Director, Public Relations
[email protected]


Category: BusinessWire, PRAsia

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