FMG Insurance leads rural insurance in New Zealand: AM Best

Geographical diversification across New Zealand helps spread insured risks.

FMG Insurance’s operating performance is deemed adequate, with a five-year average return-on-equity ratio of 6.7%. Although the fiscal year 2023 saw negative underwriting and operating results due to claims cost inflation and large weather events, FMGIL's robust pricing strategy and positive investment returns are expected to support adequate performance in the medium term, said AM Best.

FMGIL's business profile is considered neutral, benefiting from its position as a leading rural insurer in New Zealand despite a modest market share. 

The company's direct distribution model and strong brand recognition in the rural sector, supported by FMG's ownership, contribute to its established profile. Geographical diversification across New Zealand helps spread insured risks.

FMGIL’s balance sheet strength is supported by its risk-adjusted capitalisation, which is expected to remain strong according to Best’s Capital Adequacy Ratio (BCAR). 

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Despite a weakened regulatory capital position due to an operating loss in fiscal year-end 2023, the company manages its capital prudently. 

MGIL has a comprehensive reinsurance program that protects against high-severity catastrophe events in New Zealand. 

The investment portfolio is moderately risky, with a focus on cash and high-quality fixed-income securities, although there is some exposure to equities. Limited financial flexibility is a factor due to FMG's mutual ownership.

Enterprise risk management (ERM)is deemed appropriate for FMGIL's risk profile and operational scope, reflecting a developed risk management framework. Overall, AM Best's ratings affirm FMGIL's strong position in the New Zealand insurance market.