A.M. Best Affirms Rating of Pioneer Insurance Company Limited.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B+ (Very Good) of Pioneer Insurance Company Limited (Pioneer) (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 Pioneer's strong business growth, improved underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance, highly liquid investment portfolio and prudent capitalization. Pioneer has experienced strong business growth since its incorporation in 2004. Gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. increased in fiscal year 2004. The company achieved a net profit in fiscal year 2004, compared to a small loss in the previous year. Pioneer improved its underwriting result in fiscal year 2004. The company's loss ratio stood at a manageable level during the year. Pioneer continued to maintain a relatively low expense ratio, benefiting from the continued support of its stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. in sales, marketing and claims management. As of fiscal year 2004, Pioneer maintained a highly liquid investment portfolio. Cash and short-term deposits accounted for more than 70% of the company's total assets. Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. , which measures capitalization on a risk-adjusted basis, demonstrated Pioneer was adequately capitalized in fiscal year 2004. The 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. arrangements with Munich Reinsurance Company New Zealand Branch are also deemed to be conservative for Pioneer's risk exposures. Offsetting factors include the capital requirement to support the company's business expansion plan and the intense competition within New Zealand's insurance market. Pioneer expects to have an aggressive business expansion during fiscal year 2005. As a start-up motor insurer with limited underwriting experience, the company's ability to sustain a profitable underwriting performance remains uncertain. Ongoing capital support is crucial for Pioneer to facilitate its rapid growth in the future. The intense competition in New Zealand's non-life insurance market will challenge Pioneer to have a stronger market presence in the mid to long-term. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit 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 www.ambest.com. |
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