Foundation Life (NZ) focuses on restructuring life insurance portfolio

If the proposed scheme is completed, the company is seen to cease insurance activities.

Foundation Life (New Zealand) (FLNZ) could face potential expense challenges from upcoming project costs, leading to weaker profitability. However, the insurer’s operating performance is seen to stay at an appropriate level in the near to medium term, according to AM Best.

FLNZ’s operating performance has been improving over the past two years. The company’s expense ratio has been high, reflecting costs from Project Scholar—a restructuring initiative for its insurance portfolio—and reduced economies of scale due to its shrinking run-off business. 

FLNZ’s business profile is considered limited due to its role as a run-off life insurer with a moderate scale of operations in New Zealand. 

Since 2018, the company has been working on Project Scholar, which involves offering policyholders a cash buyout, replacement coverage with another New Zealand insurer, or a combination. 

The project has faced delays due to market conditions and the COVID-19 pandemic. As of August, the proposed scheme is still pending regulatory, legal, and policyholder approvals. If successfully executed, AM Best expects FLNZ to cease insurance activities.