However, future loss ratios are expected to rise.

AM Best expects Quest Insurance Group’s (New Zealand) risk-adjusted capitalisation to stay at least at a very strong level, supported by its prudent capital management policy, with dividends payable only when there is enough buffer in its regulatory solvency capital.

Quest’s balance sheet strength is supported by its risk-adjusted capitalisation, which was at its strongest level as of March 31, 2024, according to Best’s Capital Adequacy Ratio (BCAR).

The company is expected to maintain at least a very strong capitalisation level, with a prudent capital management policy that limits dividends to cases where a sufficient solvency buffer exists.

However, its capital quality is weakened by a material-affiliated asset and a small absolute capital base of $1.58m (NZ$2.6m), which makes it more vulnerable to stress scenarios.

Operating performance is assessed as adequate, driven by strong underwriting results and positive investment returns.

Quest reported a combined ratio of 84.0% for fiscal 2024, down from 88.8% the previous year. However, future loss ratios are expected to rise due to rapid growth in the less profitable comprehensive vehicle insurance (CVI) segment.

AM Best considers Quest’s ERM appropriate for its size and complexity, though the company faces elevated underwriting and execution risks following its expansion.

These risks are mitigated by close monitoring of performance and a conservative approach to pricing and reserves.

($1.00 = NZ$1.64)