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OnePath Life - Financial Strength Rating Change

Following the purchase of Express Scripts Holding Co by Cigna, the S&P Ratings Agency have lowered the Credit Rating of Cigna Corporation and therefore that of OnePath Life.

The rating has changed from A+ (Strong) to A (Strong).

OnePath Life (NZ) Limited has an A (Strong) current insurer financial strength rating under the Insurance (Prudential Supervision) Act 2010 from Standard & Poor's (Australia) Pty Limited.

A summary of Standard & Poor's rating scale is:

AAA Extremely Strong

AA Very Strong

A Strong

BBB Good

BB Marginal

B Weak

CCC Very Weak

CC Extremely Weak

SD or D Selective default or default

R Regulatory Action

NR Not rated

Ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

The full rating scale is available from Standard and Poor's at www.standardandpoors.com


Changes to AMP Business

AMP has indicated that they are not be accepting new lives for their Life insurance range of products since 31 December 2018. However they will still be accepting increases to existing lives.

They will provide more guidance shortly however in the meantime if advisers using Quotemonster do not want to include AMP in the quote comparison you can simply go to 'Settings' and untick both AMP product lines. The research will still be fully available to research users.

New guidance for collecting data about sexual identity

Stats NZ say Introducing a statistical standard for sexual identity and a framework for sexual orientation is an important step in ensuring all New Zealanders can see themselves in official statistics. Click here to read more. If disclosure is fundamental to the business of underwriting and issuing effective insurance, then steps towards making it easier for customers to tell us about themselves are vital.

Quality Product Research Limited Updates

The new research datbase V118 has just been uploaded onto Quotemonster with a few rating changes as outlined below:

  • Partners Life new policy documents dated 5 /12/ 2018 for all products
  • Pinnacle Life's Funeral Cover new policy wording
  • Nib new rating for serious illness wording
  • Westpac remediation for Life and Trauma
  • Onepath updated policy wording v 4.4
  • Co-op Bank life new policy wording for Life and Trauma

Only research subscribers get access to this content.


ASIC lines up with calls to reduce commission to zero

The Australian Financial Services Royal Commission recommendation 2.5 reads:

Recommendation 2.5 — Life risk insurance commissions When ASIC conducts its review of conflicted remuneration relating to life risk insurance products and the operation of the ASIC Corporations (Life Insurance Commissions) Instrument 2017/510, ASIC should consider further reducing the cap on commissions in respect of life risk insurance products. Unless there is a clear justification for retaining those commissions, the cap should ultimately be reduced to zero.

The Australian Government's response was:

In 2017, the Government enacted reforms to life insurance remuneration that capped the commissions a financial adviser would receive for providing advice in relation to the purchase of a life insurance product. As part of these reforms, the Government announced that ASIC would conduct a review in 2021 to consider whether the reforms have better aligned the interests of advisers and consumers. If the review does not identify significant improvement in the quality of advice, the Government stated it would move to mandate level commissions, as was recommended by the Financial System Inquiry. The Government supports ASIC conducting this review and considering the factors identified by the Royal Commission when undertaking this

ASIC update states:

ASIC will implement this recommendation. ASIC will consider this recommendation and factors identified by the Royal Commission in undertaking its post implementation review of the impact of the ASIC Corporations Life Insurance Commissions Instrument 2017/510, which set commission caps and clawback amounts, and which commenced on 1 January 2018 (ASIC media release 17-168 MR refers). As noted by the Royal Commission, and consistent with the Government’s timetable, ASIC’s review will take
place in 2021.

The Australian environment is different to the New Zealand one.

With decades of compulsory super under their belts the opportunity for fee-based revenue for financial advisers is much greater there, than it is here. I would argue strongly that the impact of such a change here would adversely affect the availability of advice, and materially reduce access to advice, in particular, from channels that offer a choice of providers.But readers must acknowledge both the gap between the Australian and New Zealand environments, and also the gap between current and potential commission levels.

For more details, read this report: Download Asic-update-on-implementation-of-royal-commission-recommendations


AM Best reaffirms Sovereign’s financial strength with A+ rating

Sovereign press release:

Ratings agency reaffirms Sovereign’s financial strength with A+ rating

Auckland, 18 February 2019.

Sovereign Assurance Company Limited (Sovereign) has had its financial strength reaffirmed by the ratings agency AM Best.

The agency awarded Sovereign an A+ (Superior) rating for the 10th consecutive year.

At the same time, AM Best removed Sovereign’s ‘review with developing implications’ status − which it applied in anticipation of  AIA Group’s purchase of Sovereign, which was completed in July 2018 − and also gave Sovereign a Long-Term Issuer Credit Rating of ‘aa-.’

AM Best assigned a stable outlook to these credit ratings.

“An insurer’s financial rating is a direct reflection of its ability to pay claims. Sovereign’s A+ rating, combined with the fact that AIA Group is one of the largest life insurers in the world, gives our customers the certainty they want that we  will be able to honour our commitment to them,” says Linda Page, Sovereign’s Chief Financial Officer.   

In the 12 months to 30 June 2018, Sovereign paid $388 million in claims.

In a media release announcing its decision, AM Best said that:

“The ratings reflect Sovereign’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management. In addition, Sovereign benefits from rating enhancement from AIA.”

Sovereign will begin operating under the AIA brand during 2019.

Founded in 1899, A.M. Best is considered one of the world’s most authoritative insurance ratings agencies.

For more details contact Craig Glover, Head of Corporate Affairs and External Communications, on 027 275 3405.