Sovereign retains A+ financial strength rating

Sovereign retains A+ financial strength rating

Sovereign has again been awarded an A+ (Superior) grade from international credit-rating agency A.M. Best Company Inc (‘A.M. Best’)[1] <#_ftn1> , on the strength of its market-leading financial position and performance.

The rating is the highest awarded to any New Zealand-based insurer, and Sovereign is the only life insurer in the country to hold an A+ result, A.M. Best’s second-highest possible rating.

“Naturally, we are very pleased with the results of A.M. Best’s evaluation, though we had expected to retain our high rating,” says Sovereign’s General Manager of Marketing and Product, David Drillien. “Although New Zealand’s insurance industry has been through some tough economic years, Sovereign maintains a strong financial position and continues to perform and grow exceptionally well.”

In its assessment, A.M. Best said: “The rating affirmations reflect Sovereign's supportive risk-based capitalisation, favourable operating performance and strong business profile.”

The rating, awarded late last year, is Sovereign’s fourth-consecutive annual A+ rating from A.M. Best, and reflects A.M. Best’s assessment that the company has “a superior ability to meet their ongoing insurance obligations”.

The agency said that Sovereign's capital position reflected its profitable earnings, which contributed to surplus growth over the past five financial years, and the company continued to maintain a solid risk-adjusted capitalisation to support its existing policyholder liabilities and business growth.

Reflecting on challenging New Zealand market conditions and new tax regulations, the agency noted there was potential for uncertainty in the industry, and lower profits. However, it confirmed that Sovereign’s A+ rating was considered “stable”, and it was well placed for the near future.

“Sovereign remains the market leader in the local industry, representing nearly 30 per cent of the market with respect to both in-force and new business,” said A.M. Best. “The company is expected to remain well positioned in the market through its well-established distribution platform and diversified insurance products over the near term.”

David Drillien says the rating should give continued peace of mind to Sovereign’s advisers and clients. “We are delighted at A.M. Best’s confidence that Sovereign is well-placed to deal with the market-wide challenges that lie ahead, and to lead the industry into the future.”

ENDS

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