Market Overview

A.M. Best Affirms Credit Ratings of Co-operative Life Limited


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

The ratings reflect Co-op Life's balance sheet strength, which A.M. Best
categorizes as adequate, as well as its strong operating performance,
limited business profile and appropriate enterprise risk management.

Co-op Life's balance sheet strength is underpinned by risk-adjusted
capitalization, as measured by Best's Capital Adequacy Ratio (BCAR),
which is expected to reach the strongest level over the near term. While
high dividend payments in recent years have led to a decline in
shareholders' equity, A.M. Best expects the full retention of earnings
in fiscal year 2019 to result in risk-adjusted capitalization being
bolstered to the strongest level. Furthermore, A.M. Best projects
capital adequacy to be maintained at this level in the future as a
result of robust internal capital generation. Offsetting balance sheet
factors include the company's small absolute capital base, which
increases its sensitivity to shock events, as well as to changes in
future performance, dividend payouts and intangible assets.

Co-op Life has a track record of strong operating performance, with the
company having reported a five-year average return on equity of 32%
(fiscal years 2014-2018). Profitability over this period has been driven
by underwriting activities, reflecting the excellent performance of its
in-force life business. Prospectively, A.M. Best expects favorable
claims experience to drive continued strong operating performance.

A.M. Best views Co-op Life's business profile as limited given its small
scale of operations. The company has a market share of less than 1% in
New Zealand's life insurance industry based on 2018 gross written
premiums. Although Co-op Life benefits from distributing its products
through its parent, The Co-operative Bank Limited, the company has a low
penetration rate among the bank's customer base. In addition, the
company has limited product and geographic diversification in New

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
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
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