Limited scale and geography constrain Provident Insurance’s business profile

AM Best sees PICL’s operating performance as adequate.

AM Best says Provident Insurance Corporation Limited's (PICL) ability to manage risk needs to keep improving to support its growth.

The insurer’s risk-adjusted capitalisation is also seen to remain at least at the very strong level, taking into account the recently completed share redemption and business growth targets.

“Other supporting balance sheet strength factors include the company’s conservative investment strategy and robust regulatory solvency position,” AM Best said in a research note

A factor that can offset this is the company’s exposure to long-duration policies that increase reserving risk; however, PICL takes a prudent reserving approach and has a history of reserve adequacy.

AM Best sees PICL’s operating performance as adequate, bolstered by its track record of underwriting profits and positive investment returns. 

PICL has made large investments in its information technology and pricing capabilities in recent periods to support its next phase of accelerated growth.

However, its business profile is seen as limited due to its “relatively modest scale of operations and limited geographical diversification, with all business emanating from New Zealand.”