Insurer Financial Strength Ratings NZ Explained | QuoteHub
By QuoteHub Editorial Team · Updated 2026-01-27
Insurer Financial Strength Ratings NZ: What They Mean and Why They Matter
When you buy life insurance, health insurance, or income protection, you are entering into a contract that might not be tested for 10, 20, or even 30 years. When the time finally comes to make a claim, the insurer needs to have the financial resources to pay it. That is what financial strength ratings measure.
Despite being one of the most important factors in choosing an insurer, financial strength ratings are among the least understood. Most New Zealanders compare premiums and product features but never check whether their insurer has the financial backing to honour its promises decades from now.
This guide explains how financial strength ratings work, which rating agencies operate in the NZ market, how to read their scales, and how every major NZ insurer is currently rated.
What Is a Financial Strength Rating?
A financial strength rating (FSR) is an independent assessment of an insurance company's ability to meet its ongoing obligations to policyholders. In plain terms, it measures the likelihood that an insurer can pay your claim when you need it.
These ratings are issued by specialised credit rating agencies that analyse an insurer's:
- Capital adequacy. Does the insurer hold enough reserves to cover expected and unexpected claims?
- Operating performance. Is the insurer consistently profitable, or is it burning through capital?
- Business profile. How diversified is the insurer's book of business, and how well positioned is it in its market?
- Risk management. How effectively does the insurer manage investment risk, underwriting risk, and catastrophe exposure?
- Reinsurance arrangements. Does the insurer have robust reinsurance in place to protect against large or clustered claims?
The resulting rating is a forward-looking opinion. It does not guarantee an insurer will never fail, but it gives consumers and regulators a standardised way to compare the financial health of different insurers.
Why Financial Strength Ratings Matter for Kiwis
Life insurance is not like buying a television. You do not receive the product at the point of sale. You receive a promise that, if something goes wrong in the future, the insurer will pay. That promise is only as reliable as the insurer's financial position.
Consider a 35-year-old who takes out life insurance and income protection today. That person may not make a claim for 25 years. Over that period, the insurer must remain solvent, continue to hold adequate capital, and maintain the financial capacity to honour potentially hundreds of millions of dollars in claims across its entire portfolio.
A strong financial strength rating provides confidence that the insurer can do this. A weak rating, or no rating at all, should prompt serious questions.
Financial strength ratings also matter because New Zealand's insurance market is relatively small. Unlike in larger markets where dozens of insurers compete, New Zealand has roughly seven to ten major life and health insurers. If one were to fail, the disruption to policyholders could be significant, particularly for those with pre-existing conditions who may struggle to obtain replacement cover.
The Three Rating Agencies That Matter in NZ
Three international rating agencies assess the financial strength of insurers operating in New Zealand. Each uses a slightly different scale and methodology, but all serve the same purpose.
A.M. Best
A.M. Best is the oldest and most specialised insurance rating agency in the world, founded in 1899. It focuses exclusively on the insurance industry and is widely regarded as the benchmark for insurer financial strength globally.
In the NZ market, A.M. Best rates Partners Life and Fidelity Life, among others.
Fitch Ratings
Fitch is one of the "Big Three" global credit rating agencies. It rates both insurers and other financial institutions. Fitch's insurance financial strength ratings are widely used across the Asia-Pacific region.
In New Zealand, Fitch rates AIA and Asteron Life (via its parent, Suncorp Group).
S&P Global Ratings
S&P Global is another of the Big Three agencies and provides financial strength ratings for insurers worldwide. S&P ratings are particularly common among larger multinational insurance groups.
In the NZ market, S&P rates Chubb Life, nib, and Southern Cross.
How to Read the Rating Scales
Each agency uses a letter-based scale that runs from the highest possible rating down to ratings that indicate financial vulnerability. The scales are similar but not identical, which can cause confusion when comparing insurers rated by different agencies.
The following table shows the key rating grades you will encounter in the NZ market.
A.M. Best Scale
| Rating | Descriptor | What It Means |
|---|---|---|
| A++ | Superior | Strongest ability to meet ongoing obligations |
| A+ | Superior | Strongest ability to meet ongoing obligations |
| A | Excellent | Strong ability to meet ongoing obligations |
| A- | Excellent | Strong ability to meet ongoing obligations |
| B++ | Good | Adequate ability to meet ongoing obligations |
| B+ | Good | Adequate ability to meet ongoing obligations |
Fitch Scale
| Rating | Descriptor | What It Means |
|---|---|---|
| AAA | Exceptionally Strong | Lowest expectation of ceasing payment |
| AA+, AA, AA- | Very Strong | Very low expectation of ceasing payment |
| A+, A, A- | Strong | Low expectation of ceasing payment |
| BBB+, BBB, BBB- | Good | Low expectation of ceasing payment, but more vulnerable to adverse conditions |
S&P Global Scale
| Rating | Descriptor | What It Means |
|---|---|---|
| AAA | Extremely Strong | Highest rating; extremely strong capacity to meet obligations |
| AA+, AA, AA- | Very Strong | Very strong capacity to meet obligations |
| A+, A, A- | Strong | Strong capacity, but somewhat more susceptible to adverse conditions |
| BBB+, BBB, BBB- | Adequate | Adequate capacity, but adverse conditions more likely to weaken ability to meet obligations |
A practical note. All the major NZ insurers currently hold ratings in the A range or above across their respective agencies. This means the NZ market is, by international standards, well capitalised. However, there are meaningful differences between an A- rating and an AA rating, particularly over long time horizons.
Current Financial Strength Ratings for Major NZ Insurers
Here is how every major life and health insurer in New Zealand is currently rated.
###. Partners Life Partners Life
- Rating: A (Excellent)
- Agency: A.M. Best
- Outlook: Stable
Partners Life is New Zealand's largest adviser-supported life insurer by new business volume. Its A (Excellent) rating from A.M. Best reflects strong capitalisation and a growing market position. Partners Life has won the ANZIIF Life Insurance Company of the Year award multiple times, most recently in 2025.
###. AIA AIA New Zealand
- Rating: AA (Very Strong)
- Agency: Fitch Ratings
- Outlook: Stable
AIA New Zealand benefits from the financial strength of its parent, AIA Group, which is the largest publicly listed life insurance group in the Asia-Pacific region. The AA rating is among the highest held by any insurer operating in New Zealand, reflecting AIA Group's substantial capital base and diversified operations across 18 markets.
###. Asteron Life Asteron Life
- Rating: A+ (Strong)
- Agency: Fitch Ratings
- Outlook: Stable
Asteron Life is part of the Suncorp Group, one of Australasia's largest insurance groups, and is backed by Japanese insurer Nippon Life. The A+ (Strong) rating reflects both the Suncorp Group's robust financial position and the additional security provided by Nippon Life's ownership. Asteron Life has the highest claims acceptance rate in NZ at 97%.
###. Fidelity Life Fidelity Life
- Rating: A- (Excellent)
- Agency: A.M. Best
- Outlook: Stable
Fidelity Life is the largest New Zealand-owned life insurer, backed by the NZ Super Fund and Ngai Tahu Holdings. Its A- (Excellent) rating from A.M. Best reflects solid capitalisation and a growing book of business, bolstered by its acquisition of the Westpac Life portfolio in 2022. Fidelity Life has paid out over $2 billion in claims since its founding more than 50 years ago.
###. Chubb Life Chubb Life
- Rating: AA (Very Strong)
- Agency: S&P Global
- Outlook: Stable
Chubb Life New Zealand is part of Chubb Limited, the world's largest publicly traded property and casualty insurer. The AA rating from S&P reflects the exceptional financial strength of the global Chubb group. In New Zealand, Chubb Life offers life, trauma, income protection, and TPD cover through the adviser channel.
###. nib nib New Zealand
- Rating: A (Strong)
- Agency: S&P Global
- Outlook: Stable
nib is an ASX-listed health insurer headquartered in Australia with a significant New Zealand operation. Its A (Strong) rating from S&P reflects sound capitalisation and a well-established market position in both the Australian and NZ health insurance markets. nib offers health insurance alongside life cover options.
Southern Cross
- Rating: A+ (Strong)
- Agency: S&P Global
- Outlook: Stable
Southern Cross is New Zealand's largest health insurer and operates as a not-for-profit organisation. Its A+ (Strong) rating from S&P reflects conservative financial management and a dominant market position. Southern Cross is consistently ranked as one of the most trusted insurance brands in New Zealand. The organisation also has a life insurance arm, Southern Cross Life Insurance, which provides life, trauma, and income protection products.
Comparing Ratings Across Agencies
Because different insurers are rated by different agencies, direct comparison requires some care. The following cross-reference table provides a rough equivalence across the three scales.
| A.M. Best | Fitch | S&P Global | General Meaning |
|---|---|---|---|
| A++ / A+ | AAA | AAA | Highest financial strength |
| A / A- | AA+, AA, AA- | AA+, AA, AA- | Very strong to excellent financial strength |
| B++ / B+ | A+, A, A- | A+, A, A- | Strong to good financial strength |
| B / B- | BBB+, BBB, BBB- | BBB+, BBB, BBB- | Adequate financial strength |
The key takeaway is that A.M. Best uses a more compressed scale than Fitch or S&P. An "A" from A.M. Best is roughly equivalent to an "AA" from Fitch or S&P, not a direct letter-for-letter match. This means Partners Life's A (Excellent) from A.M. Best is broadly comparable to the AA-range ratings that Fitch and S&P assign to other NZ insurers.
What the RBNZ Requires
The Reserve Bank of New Zealand (RBNZ) is the prudential regulator for the insurance industry. Under the Insurance (Prudential Supervision) Act 2010, all insurers operating in New Zealand must be authorised by the RBNZ.
To obtain and maintain authorisation, insurers must:
- Hold a current financial strength rating from an approved rating agency and make it publicly available.
- Meet minimum solvency requirements as set out in the RBNZ's solvency standards.
- Submit to ongoing supervision, including regular reporting on capital adequacy, governance, and risk management.
- Maintain a fit and proper governance structure, including board composition and risk management frameworks.
The requirement for a published financial strength rating is a significant consumer protection measure. It means that every authorised insurer in New Zealand has been independently assessed, and you can check that rating before committing to a policy.
You can verify an insurer's authorisation status on the RBNZ's register of authorised insurers.
What Happens If an Insurer Fails?
It is a reasonable question. If financial strength ratings exist because insurer failure is possible, what actually happens if an insurer cannot pay its claims?
New Zealand does not have a statutory insurance guarantee scheme like some other countries (such as the UK's Financial Services Compensation Scheme). This means there is no government-backed fund that automatically steps in to pay claims if an insurer becomes insolvent.
However, several protections exist:
- RBNZ intervention. The RBNZ has powers to intervene early if an insurer's financial position deteriorates. This can include requiring the insurer to raise additional capital, restricting new business, or facilitating a transfer of policies to another insurer.
- Policyholder priority. Under NZ insolvency law, policyholders have priority over general creditors in the distribution of an insurer's assets.
- Reinsurance. Most NZ insurers reinsure a significant portion of their risk with large global reinsurers. This means that even if the primary insurer fails, the reinsurer may still be obligated to pay claims.
- Portfolio transfer. In practice, when an insurer exits the NZ market or faces financial difficulty, its policies are typically transferred to another insurer. This has occurred several times in the NZ market without policyholders losing cover.
The absence of a guarantee scheme makes choosing a well-rated insurer even more important. Your insurer's financial strength rating is, in practical terms, your first line of defence.
How to Check an Insurer's Rating
Checking your insurer's financial strength rating is straightforward:
- Check the insurer's website. All RBNZ-authorised insurers are required to publish their financial strength rating. It is usually found in the footer, on an "About Us" page, or in product disclosure statements.
- Check the rating agency directly. You can search for ratings on A.M. Best, Fitch Ratings, and S&P Global.
- Check the RBNZ register. The RBNZ's register of authorised insurers includes the current financial strength rating for each insurer.
- Ask your adviser. A good financial adviser will be able to explain the financial strength rating of any insurer they recommend. If you do not have an adviser, QuoteHub can connect you with one.
Should You Choose an Insurer Based on Rating Alone?
Financial strength is critical, but it is not the only factor. The best insurer for you depends on a combination of factors including:
- Claims acceptance rate. How often does the insurer actually pay claims? This is arguably just as important as financial strength. See our comparison of all major NZ life insurers for current claims data.
- Product suitability. Does the insurer offer the specific type of cover you need, with the features and flexibility that match your circumstances?
- Premium competitiveness. What does the cover cost, and what premium structure options are available (stepped vs level)?
- Adviser support. Most NZ life insurance is arranged through financial advisers. The quality of the adviser relationship matters as much as the insurer behind the policy.
The good news is that all major NZ insurers currently hold ratings in the A range or above. This means the NZ market does not have a "bad" option in terms of financial strength. The differences between insurers are more nuanced and depend on your individual situation.
If you are unsure which insurer is the best fit, get a free, no-obligation comparison from QuoteHub. We compare all major NZ insurers and match you with an authorised adviser who can explain the options.
Frequently Asked Questions
What is a good financial strength rating for an insurer?
In the NZ context, any rating in the A range or above from A.M. Best, Fitch, or S&P Global is considered strong. All major NZ life and health insurers currently hold ratings at this level or higher. Ratings of AA or above (Fitch/S&P) or A+/A++ (A.M. Best) indicate very strong to superior financial strength.
Are financial strength ratings the same as credit ratings?
No, though they are related. A credit rating assesses an entity's ability to repay debt. A financial strength rating specifically assesses an insurer's ability to pay policyholder claims. The same agencies often issue both types of rating, but they measure different things.
How often are financial strength ratings updated?
Rating agencies typically review insurer ratings annually, but they can issue interim updates if there is a material change in an insurer's financial position. Ratings also include an "outlook" (typically Stable, Positive, or Negative) that signals the expected direction of future changes.
Can an insurer lose its financial strength rating?
Yes. If an insurer's financial position deteriorates significantly, the rating agency can downgrade its rating. In extreme cases, a rating can be withdrawn entirely. Under RBNZ rules, an authorised insurer that loses its rating must obtain a new one or risk losing its authorisation to operate in New Zealand.
Does a higher rating mean the insurer is better?
A higher rating means the insurer has a stronger financial position and is more likely to be able to pay claims over the long term. It does not necessarily mean the insurer offers better products, better premiums, or a better claims experience. Financial strength is one important factor among several when choosing an insurer.
Is my money protected if my insurer fails?
New Zealand does not have a government-backed insurance guarantee scheme. However, the RBNZ's prudential supervision framework, policyholder priority in insolvency, and reinsurance arrangements provide significant protections. Choosing a well-rated insurer remains the most effective way to protect yourself.
Disclaimer: QuoteHub is a registered financial service provider (FSP 712931). The information in this article is general in nature and does not constitute personalised financial advice. Financial strength ratings are current as at the date of publication and are subject to change. Always check the most recent rating with the relevant agency or on the insurer's website. We recommend speaking with an authorised financial adviser before making insurance decisions.
References
- Financial Markets Authority (FMA) , Insurance guidance
- ACC New Zealand
- Sorted.org.nz , Insurance guides
- Insurance & Financial Services Ombudsman (IFSO)
- MoneyHub NZ , Insurance resources
- ACC New Zealand , What we cover
Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance.