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AM Best Affirms Credit Ratings of Provident Insurance Corporation Limited

AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of Provident Insurance Corporation Limited (PICL) (New Zealand). The outlook of these Credit Ratings (ratings) is positive.

The ratings reflect PICL’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The positive outlooks reflect an improving trend in balance sheet fundamentals, including an increase in and greater stability of PICL’s risk-adjusted capitalisation, combined with growth of the company’s absolute capital base. Additionally, successful execution of PICL's business plan is expected to further support prospective internal capital generation.

The balance sheet strength assessment is underpinned by PICL’s risk-adjusted capitalisation, which is at the strongest level in fiscal year (FY) 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects PICL’s risk-adjusted capitalisation to remain at least at the strong level over the medium term, supported by positive retained earnings and conservative investment strategy. An offsetting balance sheet factor includes exposure to long-duration policies that increases reserving risk.

AM Best views PICL’s operating performance as adequate. The company reported a five-year average return-on-equity ratio of 13.8% (FYs ending 31 March 2019 – 2023), showing a positive trend in underwriting performance over this period. PICL has made significant investments into its information technology and pricing capabilities, which will increase the expense ratio in the short term but are expected to support prospective operating performance.

AM Best assesses PICL’s business profile as limited. This reflects the company’s relatively modest scale of operations and limited geographical diversification, with all business emanating from New Zealand. PICL is a niche insurer that focuses on mechanical breakdown insurance and private motor vehicle products, largely distributed through motor dealerships and several distribution partners across its domestic market.

AM Best assesses PICL’s ERM as appropriate, given the size and complexity of its operations. AM Best views the successful execution of the company’s underwriting strategy and planned infrastructure investment to be a key risk exposure. Over the medium term, PICL’s risk management capabilities are expected to continue to develop in order to support increasing operational scale and widening product offerings.

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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