A.M. Best has affirmed the financial strength rating of A-(Excellent) and the issuer credit rating (ICR) of "a-" of (TIL). A.M.Best also has affirmed the ICR of "bbb-" of the ultimate parent, (TL). The outlook for each rating remains negative. Both companies aredomiciled in New Zealand.

The ratings reflect TIL's adequate risk-adjustedcapitalization, which results from the company's moderate underwritingleverage, prudent reinsurance arrangement and conservative investments. Inaddition, over the past four accident years, the company continues to reportfavorable underwriting results, with combined ratios consistently below 95%.

A major offsetting factor in TIL's rating assessment is thevolatility in its historical earnings, stemming largely from prior-year reserveadjustments for unsettled Canterbury earthquake claims. Another offsettingfactor is the high dividend payout ratio, which has constrained growth in itsabsolute and risk-adjusted capitalization.