Sovereign's financial strength again endorsed

Media Statement

9 February 2009

Sovereign's financial strength again endorsed by AM Best

For the second consecutive year, Sovereign Assurance Company Limited (Sovereign) was, on 23 December 2008, the recipient of a Best's financial strength rating of A+ (Superior). This rating reflects Sovereign's leading market position in New Zealand, improved risk-adjusted capitalisation and continued improvements in operating performance.

With the finance industry last year beset by company failures and general uncertainty surrounding the sector, the news that Sovereign continues to maintain such high ratings provides some welcome news for consumers.

Sovereign's Managing Director, Simon Blair, is unequivocal that the most important consideration for consumers is a company's ability to meet its policy holder obligations i.e. financial strength to pay claims. Consumers need independent and consistent ratings that they can trust and cross reference against other companies. "With a school grade someone might be almost as happy with a B+ as an A-. However, in finance grades these ratings are poles apart and there is not enough information to help people understand this."

"An A+ achievement gives peace of mind to both advisers and clients as the Financial Strength Rating is a direct measure of our ability to meet our ongoing obligations to policyholders." says Simon Blair.

"Every part of the business is independently assessed in order to derive the ratings. For example, in Sovereign's case, our positive persistency trend has been commented upon favourably, as has our capital position, and our strong intellectual capital".

Financial strength is nothing new to Sovereign having been New Zealand's market leader for the past five years in the life industry with a share of 31.7% and 33.8% of the in-force and new business risk premium respectively..

In the year ahead there will be plenty of discussion about financial health and the A.M Best A+ rating clearly indicates that the outlook for Sovereign is stable.

"At a time when the insurance industry is on the tipping point of some of the most significant regulatory changes and taxation reforms, there's added confidence to be gained from these rating confirmations," he says.

"It means Sovereign is well placed and well regarded by independent market commentators as we enter a period where some uncertainty and change is inevitable."

Says Mr Blair, "Our business recognises that the needs of people are constantly changing and one of our purposes is to help them adapt to their changing financial situations and, hopefully, to help alleviate their concerns. Regular evaluation of individual needs, whilst also developing innovative products and services that will anticipate those requirements, allow us to continue to lead the market. The strong relationship with our intermediaries is crucial to enabling us to do this."

"The strength of that intermediary relationship was highlighted in September last year when Sovereign was again ranked number one in the annual WA Taylor intermediary satisfaction survey. Our intermediaries are there to work with people to assess what the best risk management strategy is for that individual, business or household. It may be that they reduce cover but still maintain it to a level that is realistic to their changed circumstances."

The rating report from AM Best stated that "The ratings reflect Sovereign's leading market position in the New Zealand life industry, strong new business growth and consistent operating profitability". The rating also recognises the company's stable risk-adjusted capitalization, which was partially supported by its effective asset liability management. This means that Sovereign has the confidence of an independent rating house that it is able to pay claims.

The A.M Best Company is internationally recognised as the preferred rating company for the insurance sector and has been operating since 1899.

ENDS

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