AM Best Affirms Credit Ratings of Pacific International Insurance Pty Limited

SINGAPORE–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Pacific International Insurance Pty Limited (Pacific) (Australia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Pacific’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). These ratings also factor in a neutral impact from Pacific’s ultimate owner, Badger Mutual Wealth (Pty) Ltd (the Badger group), an insurance group domiciled in South Africa.

Pacific’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strong level in fiscal-year ending 30 June 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the company’s prospective risk-adjusted capitalisation to remain at least at the strong level over the medium term. However, Pacific’s capital adequacy remains sensitive to the successful execution of its business plan, which includes its performance targets and projected capital generation. The company is viewed as having robust financial flexibility, with a track record of capital injections. Prospectively, shareholder support is expected to be forthcoming, as needed. A partially offsetting factor is Pacific’s moderate dependence on reinsurance; however, the risk associated with this dependence is partly mitigated by the good credit quality of the reinsurance panel.

AM Best views Pacific’s operating performance as adequate. Over the past five years, the company’s operating performance exhibited an improving trend. In fiscal year 2024, the company recorded a profit before tax of AUD 13.6 million (FY 2023: AUD 4.3 million), with a combined ratio (net/net, IFRS 17) of 94.5%, as calculated by AM Best. Additionally, investment income remains a stable contributor to overall earnings. Prospectively, AM Best expects Pacific’s operating performance metrics to remain supportive of the adequate assessment.

AM Best assesses Pacific’s business profile as limited, reflecting its growing, albeit still relatively modest scale of operations. The company has recorded elevated premium growth in recent years, with a significant proportion of this premium being ceded out to reinsurers. Pacific’s net retained insurance portfolio predominantly consists of motor, pet cover, travel and its motor novated lease partnership with an insurance distributor. AM Best expects Pacific’s net underwriting growth to remain elevated over the medium term.

AM Best assesses Pacific’s ERM as appropriate, given the size, nature and the complexity of its operations. Nonetheless, AM Best views the ongoing strengthening of the company’s ERM capabilities as necessary to support its increasing operational scale in the near to medium term. Additionally, regulatory compliance is expected to remain a key focus area given the large number of regulatory developments in Australia and New Zealand. A recent review by the Australian Prudential Regulation Authority (APRA) revealed lapses in Pacific’s risk management controls of its delegated underwriting authority arrangements. The company has since commenced the implementation of its remediation plan, with the oversight of the regulator, and is expected to be fully compliant with CPS 230, a prudential standard introduced by APRA designed to strengthen operational resilience, coming into effect 1 July 2025.

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

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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Contacts

Chee Yun
Associate Financial Analyst
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Christopher Sharkey
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Victoria Ohorodnyk
Director, Head of Analytics
+65 6303 5020
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Al Slavin
Senior Public Relations Specialist
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