RLA sustains low financial leverage, aided by Aus-NZ operations

RLA's underlying earnings remained profitable.

Resolution Life Australasia’s (RLA) capitalisation remains robust, based on the strength of its consolidated Australia and New Zealand operations. The group’s financial leverage remains low at 6%, Fitch Ratings revealed. 

Fitch views RLA as a core subsidiary of its parent, Resolution Life Group Holdings (RLGH), but assesses RLA independently based on the standalone credit quality of its operations in Australia and New Zealand. 

Resolution Life NZ is considered a core subsidiary of RLA’s holding company, Resolution Life NOHC Pty Ltd (RLNOHC), which enables RLA to meet regulatory requirements for its New Zealand branch.

In 2023, RLA reported a net loss of AU$151m, down from a profit of AU$310m in 2022, primarily due to a one-off impairment related to its wealth protection business. 

This impairment was triggered by N. M. Superannuation Proprietary Limited’s decision to cease coverage under Master Trust policies effective April 2024. 

Excluding this impact, RLA's underlying earnings from its wealth protection, superannuation, and investment businesses remained profitable.

Fitch notes that the life insurance sector in Australia and New Zealand is under significant regulatory scrutiny, prompting insurers, including RLA, to revamp products and distribution strategies. 

These market conditions are expected to offer RLA acquisition opportunities that align with its strategic goals. 

In April 2024, RLNOHC announced the acquisition of Suncorp Group Limited’s New Zealand life operation, Asteron Life Limited, which is expected to enhance the group's competitive position in New Zealand. 

This acquisition follows RLA's earlier purchase of AIA Group Limited’s Australian superannuation and investment book in July 2023.