AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Union Medical Benefits Society Limited (UniMed) (New Zealand).

The Credit Ratings (ratings) reflect UniMed’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The revision of the outlooks to stable from negative reflects the improvement in UniMed’s operating performance metrics in recent periods, thereby easing pressure on the company’s balance sheet strength fundamentals. The company’s recent underwriting performance benefitted from the active implementation of portfolio remediation actions, such as premium rate increases. This follows two consecutive years of operating losses in fiscal years 2024 and 2025, where UniMed’s underwriting performance was adversely impacted by persistent, high claim inflation in the New Zealand market. Prospectively, AM Best expects the company’s operating performance to remain supportive of the adequate assessment.

UniMed’s balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), albeit exhibiting a decreasing trend mainly driven by operating losses in recent years. The balance sheet strength assessment also takes into account UniMed’s low underwriting leverage and moderate investment risk. The company’s regulatory solvency position remains above its industry peers, as well as its internal minimum threshold. As a member-owned organisation, AM Best considers UniMed’s financial flexibility to be limited. However, this is partially mitigated by its prudent capital management strategy, which focuses on maintaining sufficient capital buffers.

AM Best assesses UniMed’s business profile as neutral. UniMed has maintained its defensible position as the third-largest player in New Zealand’s health insurance industry. As a monoline, not-for-profit insurer, UniMed has limited product diversification. However, UniMed benefits from its low product risk, with limited exposure to large loss and catastrophe events. Prospectively, AM Best expects the company’s ongoing investments in technology and marketing to support its next phase of accelerated growth and customer retention.

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

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 Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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