A new report from Standard & Poor’s Ratings Services notes that the New Zealand non-life (P/C) insurance industry is still on a downward pricing cycle that has yet to correct.
The report entitled, “Pursuit For Topline Growth Will Test Underwriting Discipline In 2008”, concluded that “gross premiums written by New Zealand non-life insurers grew by less than 1 percent in the 12 months ended September 2006,” said S&P. “This is the lowest rate of premium growth since 2000, and reflects strong pricing competition,” noted S&P credit analyst Derryl D’silva.
However, S&P also indicated that “despite sluggish topline growth in 2006, companies reported underwriting surpluses mainly due to good management of claims.” S&P said it believes premium growth will remain low into 2008, making it important for companies to “maintain their good claims management, reduce expenses, and generate sound returns on investment assets to support profitability.”
S&P’s outlook on the N.Z. non-life insurance industry remains stable, “reflecting the moderately low industry and economic risks. Although the softening market conditions had a limited impact on non-life insurers’ profitability, pricing competition will remain, driven by insurers aiming to expand or at least maintain their market shares.”
A copy of the published report is available on RatingsDirect, Standard & Poor’s Web-based credit analysis system, at: www.ratingsdirect.com.
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