Dai-ichi seen to cushion Partners Life's Expansion in New Zealand with capital support

Dependency on third-party reinsurance could offset the insurer’s standing.

Partner Life (New Zealand) should have a solid outlook, strongly supported by its balance sheet strength, adequate operating performance, neutral business profile, and effective enterprise risk management, AM Best affirmed.

The assessment also considers rating enhancement from Dai-ichi Life Holdings.

Partners Life's robust balance sheet strength is supported by strong risk-adjusted capitalization, expected to remain at the highest level in the medium term. AM Best acknowledges the insurer's financial flexibility and conservative investment approach. 

However, reliance on third-party reinsurance for risk transfer and upfront commission financing is a partial offsetting factor.

The company's operating performance is deemed adequate, with a five-year average return-on-equity ratio of 6.5% (fiscal years 2019-2023). 

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Whilst reported earnings are sensitive to New Zealand's interest rate movements, operational scale improvements are anticipated to enhance the expense ratio prospectively.

As one of the largest life insurance firms in New Zealand, Partners Life's market share grew post the acquisition of BNZ Life Insurance Limited in fiscal year 2023. 

Distribution primarily occurs through independent financial advisers and Bank of New Zealand referrals under an exclusive 10-year agreement.

The rating enhancement results from integration with and ownership by Dai-ichi group, a major life insurance entity in Japan. AM Best anticipates Dai-ichi group providing capital support if Partners Life faces capital adequacy challenges. 

Despite contributing a small portion to Dai-ichi group's overall revenues, Partners Life is strategically important for the group's expansion, particularly in New Zealand.