Overview
- On April 29, 2022, nib group completed its acquisition of nib nz insurance (formerly Kiwi Insurance Ltd.). The acquisition enhances the competitive position of nib nz (nib's existing New Zealand-based entity) by providing complementary life insurance products to the group's existing health insurance products.
- We expect nib nz insurance to benefit from group support, if needed, given its high level of operational integration, shared branding, and common board members.
- We are assigning our 'A-' long-term financial strength rating to nib nz insurance.
- The stable outlook reflects the outlook on nib nz and our view that nib nz insurance will remain a core subsidiary in nib's New Zealand subgroup.
Rating Action
On May 10, 2022, S&P Global Ratings assigned its 'A-' long-term financial strength rating to nib nz insurance Ltd. (nib nz insurance). The outlook is stable.
Rationale
In our view, the broader nib group will support nib nz insurance under any foreseeable circumstances. We therefore align the financial strength rating on nib nz insurance with the creditworthiness of the nib group.
Nib nz insurance operates in New Zealand as a life insurer with modest market share. We expect it to be well-integrated with the existing New Zealand health insurance operation, nib nz Ltd. (nib nz; A-/Stable/--), sharing its brand, operational resources, customer base, and distribution channels. We view nib nz and nib nz insurance as one operation with two licenses, and view these as a New Zealand subgroup. Nib nz insurance's board of directors is also aligned with nib nz.
We believe nib's New Zealand business continues to play an important role in the broader group's strategy and remains material in terms of capital and earnings. The acquisition of nib nz insurance includes an exclusive long-term distribution arrangement with state-owned Kiwibank Ltd. In our view, the acquisition will improve nib nz's satisfactory competitive position in New Zealand by enabling it to underwrite and bundle health and life insurance products. We view nib group's growing New Zealand operations as unlikely to be sold.
In our view, the acquisition of nib nz insurance does not materially improve the group's creditworthiness. While the acquisition adds product diversity and an additional distribution channel, it remains a modest part of the broader group and unlikely to contribute meaningfully to our assessment of group creditworthiness.
Outlook
The stable outlook on nib nz insurance reflects our expectation that it will remain a core subsidiary of the nib New Zealand subgroup over the next two years. In our view, the group is highly unlikely to divest nib nz insurance, which we expect will be operationally integrated with nib nz.
Downside scenario
A lower rating could result from a deterioration in the broader group credit profit as we do not view the nib New Zealand subgroup as being insulated from nib group credit quality. A lower rating could also reflect a weakened expectation of extraordinary support to nib's New Zealand operations over the next two years. Weakened group support could arise from a deterioration of the nib brand or reputation in New Zealand, or a shift in group risk appetite or strategic objectives.
Upside scenario
We may raise the ratings on nib nz insurance if we raise the group credit profile on the group.
Related Criteria
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Insurance | General: Insurers Rating Methodology, July 1, 2019
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
- Criteria | Insurance | General: Refined Methodology And Assumptions For Analyzing Insurer Capital Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010
Ratings List
| New Rating | |
|---|---|
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nib nz insurance Ltd. |
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| Financial Strength Rating | |
| Local Currency | A-/Stable/-- |
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Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.
| Primary Credit Analyst: | Angela Zhou, Melbourne + 61.2.9255.9841; angela.zhou@spglobal.com |
| Secondary Contact: | Craig A Bennett, Melbourne + 61 3 9631 2197; craig.bennett@spglobal.com |
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