A.M. Best Affirms Rating of Accident Compensation Corporation.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Accident Compensation Corporation (ACC See adaptive cruise control. ) (New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. ). The rating outlook is stable. The rating reflects ACC's unique status in the accident insurance market in New Zealand, improvement in underwriting performance, stable investment yield and commitment to achieving fully funded status. The rating also considers the New Zealand government's support of ACC's unfunded liabilities. As a government-owned entity operating under the Injury Prevention, Rehabilitation and Compensation Act 2001, ACC is the sole personal accident insurance provider in New Zealand. ACC significantly improved its underwriting performance by lowering its loss ratio to 74.1% in 2004 from 130.3% in 2003. The company's investment portfolio, which has been acting as an earnings stabilizer stabilizer: see airplane. , generated a net investment income of NZD NZD In currencies, this is the abbreviation for the New Zealand Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 489.4 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 309 million) in 2004 as compared to NZD 437.0 million (USD 276 million) in 2003. Despite the presence of the net surplus of NZD 875.9 million (USD 553 million) in 2004 and the change of setting levies from a "pay-as-you-go" approach to a fully funded basis, ACC still experienced a NZD 3.4 billion (USD 2.1 billion) reserve shortfall in its long-tailed actuarial liabilities in 2004. Nonetheless, A.M. Best recognizes the support of its unfunded liabilities by the New Zealand government and ACC's commitment to become fully funded through earnings contributed from investments, premium pricing Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. and tail levies. Offsetting factors include the lack of catastrophe reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. coverage and volatile underwriting experience. Movement of the claims provision has resulted in significant underwriting volatility. Without catastrophe reinsurance coverage, ACC could be financially vulnerable to any potential claims arising from any unforeseeable Un`fore`see´a`ble a. 1. Incapable of being foreseen. Adj. 1. unforeseeable - incapable of being anticipated; "unforeseeable consequences" unpredictable - not capable of being foretold natural perils. Additionally, ACC's rating is based on the expectation of the continued support by the New Zealand government. The company's market profile could be challenged by a change in legislation, although the risk is minimal. For Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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