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AM Best Affirms Credit Ratings of Co-operative Life Limited

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 100% 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, which was at the strongest level as of fiscal year end (31 March) 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the company’s risk-adjusted capitalisation to remain at the strongest level prospectively, supported by appropriate retention of operating earnings. A favourable balance sheet strength consideration is the company’s conservative investment strategy, with a focus on cash and high-quality fixed-income securities. Offsetting balance sheet strength factors include the company’s small absolute capital base, which increases the sensitivity of its capital adequacy to stress scenarios, as well as to changes in future performance, dividend payouts and the size of intangible assets.

The company has a track record of strong operating performance, with a five-year average return-on-equity ratio of 20.6% (fiscal years 2019-2023). Profitability continues to be driven by Co-op Life’s favourable claims experience, modest expense ratio and robust net investment income. Prospectively, AM Best expects a robust pricing strategy for its underwriting operations, as well as continued positive investment income, to sustain the strong operating performance assessment over the medium term.

AM Best considers Co-op Life’s business profile as limited, principally reflecting the company’s small-scale of operations, as well as its limited product and geographic diversification in New Zealand. The company’s product offerings are mainly comprised of term life and loan protection insurance products and it has a market share of less than 1% in the New Zealand life insurance industry, based on gross premiums written. As part of the Co-op Bank group, Co-op Life benefits from good distribution capabilities through its parent’s banking network, albeit maintaining a relatively low penetration rate among the bank’s customer base.

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 Performance Assessments, 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 © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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