Momentum Life logs gains with expansion, strategy: AM Best

The company’s capital remains enough to support other operations despite a planned expansion.

New Zealand-based Momentum Life Limited is expected to record positive earnings as it continues to grow and implement its strategic business plan, AM Best said.

Momentum Life’s available capital will remain sufficient to support growth of underwriting operations over the medium term amid the planned material business expansion, the agency said. The company’s balance sheet strength is also supported by its conservative investment portfolio, consisting of cash and term deposits, AM Best added.

Momentum Life has shown adequate balance sheet strength, as well as operating performance, limited business profile, and appropriate enterprise risk management. Its risk-adjusted capitalisation is projected to remain at the strongest level over the medium term. 

AM Best said the company has an adequate operating performance, with a five-year average return-on-equity ratio of 5.2%. This was despite recording an operating loss in FY2023 and the first half of FY2024 due to elevated lapse rates and higher expenses following the relocation of its Australian administrative support operations to New Zealand. 

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Since its inception as a capitalised insurer in 2018, Momentum Life’s earnings have been constrained by a high expense ratio. However, its operating performance has been supported by the favourable trail commission from insurance distribution operations before 2018, as well as reinsurance commission income. These partially offset outward acquisition costs during the initial stage of growth.

AM Best said Momentum Life’s business profile is limited, given that it is a startup insurer concentrating in New Zealand. The company benefits from good control over its underwriting and sales practices, with all products distributed through its wholly-owned subsidiary.