AM Best Credit Ratings for Veterinary Professionals Insurance Society Incorporated

SINGAPORE–(BUSINESS WIRE)–AM Best has assigned a Financial Strength Test of B (Fair) and a Long Term Creditor of “bb+” (Fair) to Veterinary Professionals Insurance Society Incorporated (VPIS) (New Zealand). The ratings given to the Credit Ratings (ratings) are fixed.

These ratings reflect the strength of the VPIS paper, which AM Best considers to be comprehensive, as well as its efficiency, limited business history and sound business management.

VPIS’s balance sheet strength assessment is driven by risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is at a very strong level. Due to the significant increase in the requirements of VPIS’s regulatory solvency regulatory status recently, its approval position should be weakened but remain above the minimum number. In addition, the company has a small enough share of NZD 3.3 million and financial flexibility, which increases the sensitivity of its sufficient capital to stress. While the VPIS reinsurance program protects the company against one large loss and public exposure, the company appears to be heavily dependent on reinsurance.

AM Best view VPIS’ operational performance to be complete, with a five-year return on equity ratio of 6.5% (fiscal years 2017-2021). This is supported by the soundness of the company, although the combined ratio showed a high volatility during this period. VPIS’s investment ratio has risen significantly compared to the number of companies due to its growth and technology investments in recent years. Investments continue to drive the company’s operations, with a five-year yield (including gains/losses) of 5.1% (fiscal years 2017-2021).

VPIS is a not-for-profit organization that provides professional indemnity insurance specifically for veterinarians in New Zealand. An analysis of the company’s business reveals its small scale operations, focus on niche products and geographic scope. However, VPIS has a leading market position in its target sector, supported by the unique knowledge and expertise of pharmaceutical products in New Zealand.

Ratings are given to organizations that have been rated before they are published. Unless otherwise stated, the ratings have not been changed following this communication.

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