Chubb Life NZ operating performance ‘adequate’: analyst

Chubb Life NZ faced challenges in its operating results in 2021 and 2022 due to interest rate hikes.

Chubb Life New Zealand’s shown a sturdy balance sheet strength, adequate operating performance, neutral business profile, and appropriate enterprise risk management, observed by AM Best. 

The assessment of Chubb Life NZ's balance sheet strength is supported by its risk-adjusted capitalisation, measured by Best's Capital Adequacy Ratio (BCAR), which was at its strongest level at the end of 2022 and is expected to remain strong in the medium term. 

This is attributed to the company's moderate underwriting leverage and conservative investment allocation. 

The company maintains a robust buffer above the minimum regulatory requirements for solvency and has adjusted its surplus targets and investment duration in response to the new solvency standards implemented in 2023.

AM Best said Chubb Life NZ's operating performance was adequate, with a five-year average return-on-equity ratio of 1.3% (fiscal years 2018-2022). 

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The company experienced challenges in its operating results in 2021 and 2022 due to interest rate hikes, impacting the fair values of its investment portfolio and net insurance assets. 

However, AM Best expects steady revenue growth and a strong pricing strategy to sustain the company's adequate operating performance.

Chubb Life NZ's business profile is viewed as neutral. It is one of the largest life insurance companies in New Zealand in terms of gross earned premiums. 

Its competitive advantage lies in its multi-channel distribution approach, particularly benefiting from a bancassurance distribution agreement with ANZ Bank New Zealand Limited and its adviser channel.