VPIS posts steady 4.0% return-on-equity over five years

AM Best also assessed its operating performance as adequate.

Veterinary Professional Insurance Society’s (VPIS) operating performance is ‘adequate’, coupled with a five-year average return-on-equity ratio of 4.0% (2019 to 2023), AM Best assessed.

The New Zealand insurer also possessed adequate balance sheet strength, underpinned by strong risk-adjusted capitalisation measured by Best's Capital Adequacy Ratio (BCAR). 

Despite this, VPIS faces challenges such as a low regulatory solvency margin post the loss of its small insurer status in fiscal year 2023, and limited financial flexibility due to its small capital base of $2.12m (NZ$3.5m) as of September 2023.

The organisation heavily relies on reinsurance to mitigate large losses and aggregate exposure.

Operating performance is assessed as adequate, with a five-year average return-on-equity ratio of 4.0%. 

VPIS maintains an elevated combined ratio due to its pricing strategy as a not-for-profit members' society and a higher expense ratio attributable to its size and recent technology investments. 

Investment income remains a significant contributor to overall performance, with a five-year average net investment yield of 4.0%.

VPIS operates as a not-for-profit entity, specialising in providing professional indemnity insurance to veterinarians in New Zealand. 

Its business profile is limited, reflecting small-scale operations, a niche product focus, and high geographic concentration. 

Despite these limitations, VPIS holds a dominant market position in its specialized segment, supported by extensive knowledge and experience within New Zealand's veterinary industry.

($1.00 = NZ$1.65)