Financial strength

| Financial strength rating | Solvency margin | Breach of minimum solvency capital requirements |

Financial Strength Rating B (fair)

Veterinary Professional Insurance Society Inc (VPIS) has been given a B (fair) insurer financial strength rating by AM Best.

Breach of minimum solvency capital requirements (as at 28 September 2022)

As we’ve been sharing over the past year or so we have reached the exciting milestone of officially no longer being regarded as a small insurer. That’s great news, as it means tighter regulation to ensure you’re even better protected. One of the requirements is that our solvency capital position needs to be above the minimum of $3m. We have been rapidly approaching this level and at the end of 30 September 2022 we are expecting it to be just shy of that. The good news is that, whilst we will be in technical breach from 1 October 2022, the Reserve Bank is allowing us forbearance for a year as we continue our growth trajectory to surpass the minimum solvency requirements.

So, what does this mean for your insurance cover? Nothing. Your insurance will not be affected.

Further, as a licensed insurer we are now required to have an independent current financial strength rating. Ours is provided by the Reserve Bank approved rating agency AM Best and they rate our financial strength as B (Fair). This means that we are considered by AM Best to have a fair ability to meet our ongoing insurance obligations. The AM Best rating scale is detailed below.

Guide to AM Best's Financial Strength Ratings (FSR)

An AM Best's Financial Strength Rating (FSR) is an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations. An FSR is not assigned to specific insurance policies or contracts and does not address any other risk, including, but not limited to, an insurer's claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder.

AM Best's Financial Strength Rating (FSR) Scale

Rating Categories Rating Symbols Rating Notches* Category Definitions
Superior A+ A++ Assigned to insurance companies that have, in our opinion, a superior ability to meet their ongoing insurance obligations
Excellent A A- Assigned to insurance companies that have, in our opinion, an excellent ability to meet their ongoing insurance obligations.
Good B+ B++ Assigned to insurance companies that have, in our opinion, a good ability to meet their ongoing insurance obligations.
Fair B B- Assigned to insurance companies that have, in our opinion, a fair ability to meet their ongoing insurance obligations. Financial strength is vulnerable to adverse changes in underwriting and economic conditions.
Marginal C+ C++ Assigned to insurance companies that have, in our opinion, a marginal ability to meet their ongoing insurance obligations. Financial strength is vulnerable to adverse changes in underwriting and economic conditions.
Weak C C- Assigned to insurance companies that have, in our opinion, a weak ability to meet their ongoing insurance obligations. Financial strength is very vulnerable to adverse changes in underwriting and economic conditions.
Poor D - Assigned to insurance companies that have, in our opinion, a poor ability to meet their ongoing insurance obligations. Financial strength is extremely vulnerable to adverse changes in underwriting and economic conditions.

* Each AM Best's Financial Strength Rating Category from "A+" to "C" includes a Rating Notch to reflect a gradation of financial strength within the category. A Rating Notch is expressed with either a second plus "+" or a minus

Solvency Margin

Under section 4.5 of the Solvency Standard for Non-Life Insurance business, issued by the Reserve Bank of New Zealand under section 55 of the Insurance (Prudential Supervision) Act 2010, VPIS is required to disclose certain information regarding its solvency position.

  As at September 2021
VPIS's Actual Solvency Capital $2.857m
VPIS's Minimum Solvency Capital $0.676m
VPIS's Solvency Margin $2.180m
VPIS's Solvency Ratio 422%.

Breach of minimum solvency capital requirements

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