Reading Time: 2 minutes

SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Police
Health Plan Limited (PHP) (New Zealand). The outlook of these Credit
Ratings (ratings) is stable.

The ratings reflect PHP’s balance sheet strength, which AM Best
categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk

PHP’s balance sheet strength is underpinned by risk-adjusted
capitalization that remains at the strongest level, as measured by
Best’s Capital Adequacy Ratio (BCAR). This reflects its moderate
underwriting leverage and prudent investment strategy. However, an
offsetting factor is the company’s small capital base, which increases
the potential for volatility in its risk-adjusted capitalization.

Operating performance is adequate, with a moderate level of volatility,
as demonstrated by a five-year average return-on-equity ratio of 7.8%
(fiscal years 2014-2018). PHP benefits from a highly efficient cost
structure that allows it to offer competitive health coverage and
premiums to its members. Profit margins have declined in recent years
due to the mutual insurer’s strategy to achieve break-even operating
results. Nevertheless, PHP continues to post positive operating
earnings, driven by robust investment returns. AM Best expects PHP to
maintain adequate operating results, supported by favorable investment
returns and its demonstrated ability to adjust premium rates rapidly in
response to any deterioration in claims experience.

PHP is a non-profit organization that provides health insurance
exclusively to current and former police force members and their
families. The company’s business profile is assessed as neutral, despite
its small market share and concentration in New Zealand’s health
insurance market. It has a high penetration rate within the police force
and its close integration with its ultimate parent, the New Zealand
Police Association, gives rise to synergy and efficiency benefits. The
company has preferential access to the police force in New Zealand,
benefits from low distribution costs and shares overhead costs with the
broader group. Despite challenging market conditions, its membership has
grown steadily in recent years due to government initiatives aimed at
growing the police force.

Ratings are communicated to rated entities prior to publication.
Unless stated otherwise, the ratings were not amended subsequent to that

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
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its


Sin Yee Chuah
Financial Analyst
+65 6303 5022
[email protected]


Manager, Public Relations
+1 908 439
2200, ext. 5159

[email protected]


Associate Director, Analytics
+65 6303 5020
[email protected]


Director, Public Relations
+1 908 439
2200, ext. 5644

[email protected]