AM Best has affirmed Hollard Australia’s credit ratings and says the outlook is stable, reflecting a strong balance sheet, adequate operating performance and appropriate risk management.

AM Best gave Hollard Insurance Company a financial strength rating of A- and a long-term issuer credit rating of “a-”.

The agency calculates that Hollard’s combined ratio improved to 99.9% for the 2018/19 financial year, from 107% in fiscal 2015.

“Hollard’s combined ratio has exhibited an improving trend over recent years, driven by expense ratio improvements as a result of increased operational scale,” AM Best said.

“The company is engaged in ongoing strengthening of its risk management capabilities in line with increased operational scale and risk profile.”

The agency assesses Hollard’s business profile as neutral and says it has grown to be one of the top 10 non-life insurers in Australia based on gross written premiums, with market share of 3%.

Hollard maintains a strong market position in a number of niche segments, including pet insurance, and targets high growth over the medium term via strategic partnerships with a network of distributors and underwriting agencies.

The company’s balance sheet strength improved to “very strong” in the last financial year, and Hollard has robust financial flexibility which has helped bolster capital adequacy and supported growth in its underwriting operations, the ratings agency said.

With an average return-on-equity ratio of 5.9% for five years, Hollard’s equity holdings in underwriting agencies have supported robust investment returns, a key driver of overall earnings.

Enterprise risk management (ERM) is appropriate “given the size and complexity of Hollard’s operations”, AM Best said.