UniMed’s capitalisation hits strongest level in 2023

Thanks to low underwriting leverage and moderate investment risk. 

New Zealand-based Union Medical Benefits Society (UniMed) holds a very strong balance sheet, supported by its robust risk-adjusted capitalization, as measured by AM Best’s Capital Adequacy Ratio (BCAR). 

For the fiscal year ending 30 June 2023, the company's capitalisation was at the strongest level, bolstered by low underwriting leverage and moderate investment risk. 

UniMed's regulatory solvency significantly exceeded both the regulatory minimum and its own internal threshold, although its financial flexibility remains somewhat limited as a member-owned organisation. 

This constraint is mitigated by the insurer’s prudent capital management and consistent internal capital generation.

Operating performance is rated as adequate, with UniMed posting a five-year average return on equity of 4.7% and a combined ratio of 95.7% between fiscal years 2019 and 2023. 

The shift from strong to adequate performance reflects increased pressure from higher-than-expected claims, with a combined ratio of 101.1% in 2023 due to above-budget losses. 

Whilst management has introduced remedial actions, such as rate increases, to address underwriting challenges, elevated loss ratios are expected in the near term. 

Investment income remains a key contributor, with an average return of 2.1% over the past five years, supporting overall performance.

UniMed’s business profile has improved, with AM Best upgrading it from limited to neutral following the acquisition of Accuro Health Insurance Society Limited’s portfolio in fiscal year 2024. 

As a not-for-profit monoline insurer, UniMed focuses exclusively on health insurance in New Zealand, limiting its product diversification. 

However, its low exposure to large losses and catastrophes helps mitigate risk. Future growth is expected to be supported by ongoing investments in technology and marketing aimed at enhancing customer retention and accelerating business expansion.