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AM Best Affirms Credit Ratings of DPL Insurance Limited
[August 19, 2021]

AM Best Affirms Credit Ratings of DPL Insurance Limited

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb" (Good) of DPL Insurance Limited (DPL) (New Zealand). The outlook of the Credit Ratings (ratings) is stable.

The ratings reflect DPL's balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also factor in a neutral impact from the company's ultimate ownership by Turners Automotive Group Limited (Turners), a motor vehicle retailer and financial services group in New Zealand.

DPL's balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), which remained at the strongest level in fiscal year 2021. This reflects the company's controlled growth, robust underwriting performance and appropriate retention of overall earnings. A partially offsetting balance sheet factor remains the significant volume of intangible assets arising from the company's acquisition of Autosure's insurance business in 2017, including goodwill items relating to the brand name and acquired agency relationships.

DPL's operating performance is viewed as adequate. The company reported a five-year average return-on-equity ratio of 10.4% (fiscal years 2017-2021). Technical performance has exhibited an improving trend over the past four years, with the combined ratio moving to 83.9% in fiscal year 2021 from 102.7% in fiscal year 2018, primarily driven by DPL's initiatives to enhance pricing and risk selection for its core insurance products. In addition, given the lower usage of motor vehicles due to the COVID-19 pandemic, the company saw reduced claims costs in its mechanical breakdown insurance (MBI) and guaranteed asset protection lines of business in fiscal year 2021. Investment returns remain a key driver of DPL's operating performance, with an average net investment yield (excludinggains and losses) of 3.2 % over the last five fiscal years.

AM Best views the company's business profile as limited given its niche and relatively modest scale of operations. DPL's ownership and affiliation with its parent, Turners, which is the largest retailer of used motor vehicles in New Zealand, provides good access to business and creates a valuable distribution network. However, DPL's core lines of business, including MBI for motor vehicles in New Zealand, remain subject to competitive market conditions. In addition, DPL's premium growth in 2020 and 2021 has been impacted by the fluctuations in used car sales due to disruption caused by the COVID-19 pandemic.

AM Best considers DPL's approach to risk management to be appropriate given the size and complexity of its current operations. DPL also is viewed to benefit from a level of risk management oversight and governance from the Turners group.

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 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

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