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AM Best Affirms Credit Ratings of Co-operative Life Limited

September 16, 2021 GMT


AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Co-operative Life Limited (Co-op Life) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Co-op Life’s balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the company’s ultimate ownership by The Co-operative Bank Limited (Co-op Bank).

Co-op Life’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation that remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This reflects the company’s low net underwriting leverage and conservative investment strategy. Offsetting balance sheet factors include the company’s small absolute capital base, which increases the sensitivity of capital adequacy to stress scenarios, as well as to changes in future performance, dividend payouts and the size of intangible assets.


Co-op Life has a track record of strong operating performance, with the company having reported a five-year weighted average return-on-equity ratio of 27.4% (fiscal years 2017-2021). Profitability continues to be driven by the strong underwriting performance of its in-force life insurance portfolio, coupled with positive investment returns. Prospectively, AM Best expects that Co-op Life’s robust pricing strategy for its underwriting operations, as well as its continued positive investment income, will help it maintain the strong operating performance assessment over the medium term.

AM Best considers Co-op Life’s business profile as limited, largely reflecting the company’s small-scale of operations and its limited product and geographic diversification in New Zealand. The company provides mainly term life and loan protection insurance products to customers of its parent, Co-op Bank. Although Co-op Life benefits from distributing its products through its parent’s nationwide banking network, the company exhibits a relatively low penetration rate among the bank’s customer base. Co-op Life has a market share of less than 1% of New Zealand’s life insurance industry, based on fiscal year 2021 gross premiums written. AM Best notes that competitive market conditions persist in the New Zealand life insurance sector. Co-op Life’s revenues may be challenged over the medium term due to a weaker sales environment as a result of the economic uncertainty related to the COVID-19 pandemic, as well as the rationalising of Co-op Bank’s physical branch network.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.


This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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CONTACT: Sin Yee Chuah

Financial Analyst

+65 6303 5022

sinyee.chuah@ambest.comAlex Rafferty, ACA

Associate Director, Analytics

+44 20 7397 0312

alex.rafferty@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comJim Peavy

Director, Communications

+1 908 439 2200, ext. 5644




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PUB: 09/16/2021 10:10 AM/DISC: 09/16/2021 10:11 AM