A.M. Best Affirms Ratings of Co-operative Life Limited

A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of Co-operative Life Limited (Co-op Life) (New Zealand). The outlook for both ratings is stable.

The rating affirmations reflect Co-op Life's favorable risk-adjusted capitalization, low product risk profile and prudent investment portfolio. As a subsidiary of The Co-operative Bank Limited (Co-op Bank), Co-op Life also benefits from Co-op Bank’s network of more than 30 branches throughout New Zealand, as well as a captive stream of business referrals from Co-op Bank.

Offsetting rating factors include the relatively small scale of Co-op Life's in-force portfolio, as well as continued contingent commitment to support certain debt holders of Co-op Bank.

As an insurance subsidiary of a banking group, Co-op Life’s total assets are regulated to not be greater than 1% of the bank’s total consolidated assets. This effectively implies a growth constraint on this insurance business as well.

Although the continued contingent commitment to support certain debt holders of Co-op Bank has diminished significantly over the past two years, the remaining contingent commitment remains sizeable relative to Co-op Life’s capital position.

Co-op Life is well positioned at its current rating level. Factors that could lead to negative rating actions include material deterioration of actual solvency capital as a result of operating losses or deterioration in Co-op Bank’s financial strength.

The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Evaluating Non-Insurance Ultimate Parents

• Risk Management and the Rating Process for Insurance Companies

• Understanding Universal BCAR

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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