Pacific’s capital strength stable despite reinsurance reliance: AM Best

It’s net underwriting growth is expected to stay elevated in the medium term.

Pacific International Insurance Pty Limited (Pacific) holds a stable outlook, thanks to the company’s balance sheet strength is assessed as adequate, supported by strong risk-adjusted capitalisation as of 30 June, AM Best.

Furthermore, the credit rating agency expects Pacific’s capital position to remain strong in the medium term, though this depends on the successful execution of its business plan and projected capital generation. The company’s reliance on reinsurance is noted, but the quality of its reinsurance panel mitigates this risk.

Pacific’s operating performance is considered adequate, with an improving trend over the past five years. In fiscal year 2024, it reported a pre-tax profit of A$13.6m, up from A$4.3m in 2023, with a combined ratio of 94.5%. 

Investment income continues to provide stable support to earnings. AM Best expects Pacific’s financial performance to remain in line with the adequate assessment.

The company’s business profile remains limited, despite recent premium growth. A large portion of premiums continues to be ceded to reinsurers, and Pacific’s retained portfolio primarily includes motor, pet, travel, and its motor novated lease partnership. 

Net underwriting growth is expected to stay elevated in the medium term.