AM Best Affirms Australia’s Pacific International Insurance Ratings 

KUALA LUMPUR, March 21 (Bernama) -- AM Best, a global credit rating agency, 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.

In a statement, AM Best said these ratings reflected Pacific’s adequate balance sheet strength, 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, a South Africa-based insurance group.

Pacific’s balance sheet strength is supported by its strong risk-adjusted capitalisation in the fiscal year ending 30 June 2024, as measured by Best’s Capital Adequacy Ratio, and its track record of capital injections. However, capital adequacy remains sensitive to the execution of its business plan.

While the company has a moderate dependence on reinsurance, this is mitigated by the good credit quality of the reinsurance panel.

AM Best noted Pacific’s improving operating performance, with a profit before tax of AUD$13.6 million in fiscal year 2024, up from AUD$4.3 million in 2023. The company reported a combined ratio of 94.5 per cent, with investment income continuing to contribute to overall earnings. (AUD$1 = RM2.78)

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Despite Pacific’s growing scale, AM Best assesses its business profile as limited, given its reliance on reinsurance and its focus on motor, pet, travel, and novated lease insurance. Net underwriting growth is expected to remain high over the medium term.

The company’s ERM framework is deemed appropriate for its operations, though further enhancements are necessary to support expansion.

Regulatory compliance remains a priority, particularly following a review by the Australian Prudential Regulation Authority (APRA) that highlighted lapses in risk management controls, while Pacific is currently implementing a remediation plan under regulatory oversight and is expected to comply with APRA’s new CPS 230 prudential standard by July 1.

-- BERNAMA