Fitch approved to rate Kiwi insurance companies

Friday 3rd September 2004

Fitch Ratings, the international rating agency, has been formally approved by the registrar of companies as an "approved agency" for rating New Zealand insurance companies.

Under the Insurance Companies (Ratings and Inspections) Act 1994, insurers selling general or disaster insurance in New Zealand are required to obtain a rating from an approved rating agency.

"This marks a significant step in the development of Fitch's presence in the New Zealand market," Fitch's Australasian managing director Andrew Smith said.

Meanwhile, Fitch has affirmed New Zealand's long-term foreign and local currency ratings at AA+ and AAA respectively with stable outlook. The short-term foreign currency rating is affirmed at F1+.

"Among the key factors supporting New Zealand's sovereign ratings are the economy's demonstrable resilience to external shocks, sound public finances and a well-developed risk management culture fostered by long experience of a freely floating exchange rate," Fitch senior director of sovereign ratings, Paul Rawkins, said.

Rawkins said the agency also took comfort from the findings of a recent IMF Financial System Stability Assessment that give New Zealand a clean bill of health, notwithstanding banks' large net overseas exposure and significant swings in the exchange rate since end-2001.

However, Rawkins said "persistent current account deficits, high net external indebtedness and low international liquidity remain the major constraints on the rating."

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