Insurer’s rating on the rise
DPL Insurance has been given a positive long-term issuer credit rating (ICR) after its outlook was revised up from stable by AM Best, a global credit rating agency based in the United States.
The agency has also affirmed the financial strength rating (FSR) of DPL Insurance as B++, or good, and its long-term ICR as “bbb”, or good.
The outlook of the New Zealand insurance company’s FSR is described by AM Best as stable.
AM Best notes the credit ratings reflect DPL’s balance sheet strength, which it assesses as strong, as well as the firm’s “adequate operating performance, limited business profile and appropriate enterprise risk management”.
The ratings also factor in a neutral impact from the company’s ultimate ownership by Turners Automotive Group.
James Searle, DPL’s general manager, says: “It’s great to have our rating agency acknowledge the strength of our business, particularly our Autosure division.
“This is particularly pleasing right now, as insurer ratings are generally under pressure from rising costs, given the current environment and economic outlook.”
AM Best explains the revision of the long-term ICR outlook to positive reflects DPL’s improved operating performance metrics in recent years, supported by solid underwriting results and robust investment income.
The company reported a five-year average return-on-equity ratio of 13.5 per cent in the fiscal years from 2019 to 2023.
“The underwriting results exhibited an improving trend over the past five years, with the combined ratio reducing to 77.4 per cent in fiscal year 2023 from 96 per cent in fiscal year 2019,” adds the agency.
“This is driven primarily by DPL’s initiatives to enhance pricing and risk selection for its core insurance products, as well as cost-saving initiatives implemented by the company.
“In addition, the company benefited from lower claims frequency for the motor-related lines of business as a result of Covid-19 in recent years.”
DPL reported an average net investment yield, excluding gains and losses, of 3.2 per cent over the past five fiscal years.
