Chubb New Zealand to adjust capital strategy within 24 months

It is also expected to receive substantial support from its parent.

Chubb Insurance (New Zealand) is expected to lower redundancy outcomes to boost its excess capital back to the group within the next 24 months.

“We further moderate our broader capital and earnings assessment to strong reflecting Chubb New Zealand's modest capital base of less than $100m,” S&P Global Ratings said.

Financially, Chubb New Zealand’s small but solid balance sheet is reflected in its risk-based capital. Under revised criteria, the insurer’s capital showed a 99.95% redundancy at the end of the forecast period to 2026, slightly reduced from the 99.99% redundancy under the previous criteria. 

Chubb New Zealand is expected to receive substantial support from its parent, Chubb, in nearly all foreseeable scenarios. 

This expectation is based on the insurer's high level of integration with the Chubb group, including shared branding, integrated systems, and access to a multinational client base. 

The subsidiary benefits from the group's disciplined underwriting and pricing, with operational ties to Chubb's Australian operations.

The insurer’s risk management is supported by robust internal group and external reinsurance arrangements. Chubb New Zealand maintains conservative risk retention and uses quota share treaties for certain lines, contributing to its stability.

However, its position as the ninth-largest property and casualty insurer in New Zealand limits its business risk profile.

“In the 12 months to March 31, 2024, Chubb New Zealand accounted for about 2.7% of industry gross written premiums. While ranking at the lower end of midsize insurers, we expect Chubb New Zealand to maintain a strong reputation among brokers and clients for underwriting more complex commercial risks,” the ratings agency added.

Chubb New Zealand’s earnings are expected to withstand rising weather-related claims and natural disaster risks due to its capped catastrophe exposure and low retention levels after reinsurance. 

The insurer’s effective management of the 2023 Auckland floods and Cyclone Gabrielle further supports its underwriting strength.