Sydney: AM Best has affirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of 'bbb' (Good) for Australia's Pacific International Insurance Pty Limited (Pacific), maintaining a stable outlook. The affirmation reflects Pacific's robust balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management (ERM).
According to BERNAMA News Agency, AM Best highlighted an upgrade in Pacific's balance sheet from adequate to strong, attributed to risk-adjusted capitalisation at the strongest level as of fiscal year-end June 30, 2025. This improvement is measured by Best's Capital Adequacy Ratio, showcasing Pacific's capacity to sustain strong capitalisation due to positive earnings generation and robust financial flexibility, which includes a history of capital injections.
The company's moderate reliance on reinsurance is mitigated by the solid credit quality of its reinsurance partners. Operating performance has been deemed adequate, with improvements over the past five fiscal years. In FY 2025, Pacific achieved a net/net combined ratio of 95.2% under IFRS 17, and a return on equity of 16.6%, driven by solid underwriting results and stable investment income. Investment returns also contributed a net yield of 6.2% in the same fiscal year.
Pacific's business profile is characterized as limited, owing to its relatively modest operational scale despite recent elevated premium growth, a significant portion of which has been ceded to reinsurers. The company's net retained portfolio includes motor, pet, travel insurance, and a motor novated lease partnership, with medium-term net underwriting growth anticipated to remain elevated.
ERM is assessed as appropriate, with ongoing enhancements expected to facilitate operational expansion. Regulatory compliance is a priority, especially in light of developments in Australia and New Zealand. After a 2024 review by the Australian Prudential Regulation Authority, Pacific is on schedule to complete its remediation program under regulatory oversight by 2026.