Market Overview

A.M. Best Affirms Credit Ratings of Youi NZ Pty Limited


A.M. Best has affirmed the Financial Strength Rating of B++
(Good) and the Long-Term Issuer Credit Rating of "bbb" of Youi NZ Pty
(Youi NZ) (New Zealand). The outlook of these Credit Ratings
(ratings) is stable.

The ratings reflect Youi NZ's balance sheet strength, which A.M. Best
categorizes as very strong, as well as its marginal operating
performance, limited business profile and appropriate enterprise risk

Youi NZ's balance sheet strength assessment is very strong, reflective
of its low underwriting leverage, prudent reinsurance program and highly
liquid investment portfolio. Given the volume of risks that Youi NZ
currently writes and retains, the capital required to support the
company's book of business is relatively modest. In addition, Youi NZ
continues to invest its technical and shareholders' funds
conservatively, with cash and term deposits making up the entire
investment portfolio. Altogether, these factors contribute to the
company's very strong balance sheet assessment.

Consistent with Youi NZ's indicated marketing plan and strategy during
its start-up phase, A.M. Best expects underwriting results to exhibit a
pattern of comparatively high operating expense ratios. This is due
mainly to the company having a small premium base from which to cover
its operating expenses, resulting in negative underwriting results.
Prospectively, as Youi NZ continues to mature, A.M. Best expects its
operating results to turn positive and gradually improve over time.

Youi NZ is a direct insurer focused on short-tail personal lines
products in New Zealand, including car, home, motorcycle, trailer and
watercraft insurance. All business is generated through a direct
distribution model utilizing the internet combined with call center
operations. Claims experience has shown a steady improvement, as the
business continues to mature. Nevertheless, Youi NZ's current
competitive market position and geographical concentration have
constrained its business profile assessment.

The stable outlooks reflect A.M. Best's expectation that Youi NZ will
continue to improve its operating and underwriting results, supported by
stable claims ratios and an expense ratio that should decline over time.
A material decline in Youi NZ's risk-adjusted capitalization, due to a
failure to meet its projected underwriting performance, may trigger
negative rating actions.

Ratings are communicated to rated entities prior to publication.
Unless stated otherwise, the ratings were not amended subsequent to that

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
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