AM Best has maintained the under review with negative implications status for the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of "bb" of Lifetime Income Limited (LIL) (New Zealand).
These Credit Ratings (ratings) were placed under review with negative implications on 5 November 2020, following regulatory licence conditions imposed on the company by the Reserve Bank of New Zealand (RBNZ), which require LIL to hold additional capital margins in excess of existing regulatory minimums. These licence conditions followed volatility in the company’s regulatory solvency position, with breaches of the minimum solvency margin identified in fiscal-year 2020. Subsequently, LIL’s parent group, Retirement Income Group Limited (RIG), initiated a capital raising exercise, which was expected to complete in December 2020.
To date, RIG has not been able to raise sufficient new capital to meet the additional regulatory capital requirements of the licence conditions at LIL. Consequently, the company is considering alternative regulatory capital options, in consultation with the RBNZ and the Financial Markets Authority (FMA). AM Best notes that during this period, the Lifetime Income Fund has been closed to new investments from new and existing policyholders. The maintaining of the under review with negative implications status reflects continued uncertainty surrounding the execution of LIL’s capital strategy and consequently the company’s ability to comply with its licence conditions.
The ratings will remain under review pending completion of the group’s review of alternative regulatory capital solutions, which is expected to conclude during February 2021, and until AM Best can fully assess the impact of these recent developments on LIL’s credit rating fundamentals.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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