Strength of Kiwibank’s insurance business revealed

The ratings agency has given Kiwi Life Insurance a financial strength rating of A- (Excellent) and an issuer credit rating of “a-”. The outlook assigned to both ratings is stable.

The ratings reflect Kiwi Insurance’s status as a member of the New Zealand Post group of companies, its operating performance and balance sheet strength.

Access to NZ Post’s nationwide network and customer base helps to minimise Kiwi Insurance’s distribution costs. This strengthens Kiwi Insurance’s earnings quality due to its low amount of capitalised acquisition costs. Cost efficiencies from using shared group resources also contribute to Kiwi Insurance’s low cost structure.

Kiwi Insurance has shown a profitable operating performance in the past five years. Return on equity averaged 25%, despite full earnings retention and a substantial capital injection in 2011.