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The insurers most likely to withstand financial and economic stress (updated)

The insurers most likely to withstand financial and economic stress (updated)

When you take out insurance and pay the premium, you are relying on your insurer being there to pay out a claim if you have to make one. This is a real issue if we suffer a major national catastrophe such a big earthquake or volcano which threatens the whole economy. (Updated with July 2010 revisions.)

The global financial crisis is also a major economic event.

When times get tough, every company goes under increased financial stress. For many finance companies, it has been disasterous. But how are insurers faring?

Before any insurer can offer its first policy, they must deposit a bond of $500,000 with the Public Trustee, and file their annual accounts publically. The Public Trustee currently holds 132 such deposits, amounting to an impressive $66 million in total.

Every insurer that carries on disaster or general insurance business in New Zealand must have a current rating of its claim paying ability. And those ratings can only be by officially approved raters. At present ony three have that approval to rate insurance companies: Standard & Poors, Fitch Ratings, and AM Best.

The Ministry of Economic Development maintains a register of those ratings, and their changing history.

Here is a summary of those ratings, listed in descending order. It's not a comprehensive list, but it does cover the major insurers operating in New Zealand. This list is as at July 6, 2010, the last time the MED compiled its quarterly review.

AAA  "Exceptionally Strong"
- NZ Earthquake Commission, and has had this rating since 1995

AA+  "Very Strong"

AA  "Very Strong"
- Westpac Life, and this rose from AA- in February 2007

AA-  "Very Strong"
- AMP Life, up from A+ in August 2004
- Genworth Mortgage Insurance, down from AA in February 2009
- IAG NZ, down from AA in May 2008
- Swann Insurance, down from AA in May 2009
- Travellers Insurance, up from A+ in April 2008

A+  "Strong"
- AA Insurance, up from BBB+ in May 2007
- American Home assurance, down from AA+ (down three notches) in September 2008
- American International Assurance, down from AA+ (down three notches) in September 2008
- AMI Insurance, up from A in October 2008
- QBE Insurance, up from A in December 2001
- Southern Cross Medical Care, down from AA- in February 2002
- Sovereign Assurance, up from A in December 2007
- AXA, as National Mutual Life Assn, down from AA in November 2009
- Vero Insurance, up from A in August 2004
- Zurich Australian Insurance, up from A in December 2007

A   "Strong"
- ACE Insurance
- Allianz NZ, up from A- in November 2004
- FMG, up from A- in June 2010
- NZ Local Government Insurance, up from A- in October 1997

A-  "Strong"
- Ansvar Insurance, down from A in December 2003
- CIGNA Life, down from A in March 2004
- Consumer Insurance Services, up from BBB- in July 2001
- Fidelity Life
- Lumley General, down from A in October 2003
- Medical Insurance Society, up from BBB+ in October 1997
- Tower Insurance, up from BBB+ in February 2004

BBB+  "Good"
- Telco Insurance

BBB  "Good"
- Gordian Runoff, down from BBB+ October 2001
- Southsure, up from BBB- in November 2009

BBB- "Good"

BB+  "Marginal"

BB   "Marginal"

BB-   "Marginal"
- Pioneer Insurance, up from B in November 2009
- Simply Insurance, down from B in October 2006

B+   "Weak"
- Pacific International,

B    "Weak"
- Nationwide Insurance
- NLG Insurance, down from BB- in March 2009

B-   "Weak"

CCC  "Very Weak"

CC   "Extremely Weak"
- Quest Insurance, down from CCC in February 2010

We will update this list when the 2010 third quarter review is published by the Ministry of Economic Development.


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