Wellington: Global credit rating agency, AM Best has affirmed the financial strength rating of B+ (Good) and the long-term issuer credit rating of ‘bbb-‘ (Good) for New Zealand’s Provident Insurance Corporation Limited (PICL), with a stable outlook on these credit ratings.

According to BERNAMA News Agency, AM Best stated that PICL’s balance sheet strength remains adequate, underpinned by risk-adjusted capitalisation at the strongest level as of fiscal year-end March 31, 2025, as measured by Best’s Capital Adequacy Ratio. The risk-adjusted capitalisation is expected to remain at least very strong, considering the recently completed share redemption and business growth targets.

The insurer maintains a conservative investment strategy and solid regulatory solvency, though it is partially offset by exposure to long-duration policies that elevate reserving risk. AM Best noted PICL’s prudent reserving practice and track record of reserve adequacy.

AM Best assessed PICL’s operating performance as adequate, supported by consistent underwriting profits and positive investment returns. In fiscal year 2025, the company reported a combined ratio (net/net, IFRS 17) of 96.9 percent and a return-on-equity of 13.4 percent, as calculated by the credit rating agency.

PICL’s business profile remains limited due to its relatively modest scale of operations and limited geographical diversification, with all business emanating from New Zealand. The company primarily operates as a niche provider of mechanical breakdown and private motor vehicle insurance, distributed largely through motor dealerships and domestic partners. Pricing risk from multi-year policies remains a key consideration.

AM Best continues to view PICL’s enterprise risk management as appropriate. The rating agency highlighted execution of growth plans as an ongoing risk but noted that PICL has strengthened internal capabilities through recent technology and pricing system investments.