New Zealand
• The Country Risk Tier (CRT) reflects A.M. Best’s assessment
of three categories of risk: Economic, Political and
Financial System Risk.
• New Zealand is a CRT-2 country with moderate levels of
economic risk and low levels of political and financial system
risk.
• New Zealand’s economy entered into a recession in 2008.
A large decline in the housing market, coupled with the
global financial turmoil led to an economic contraction in
both 2008 and 2009. A mild and uneven economic recovery
has been underway in 2010 and 2011, which is expected to
continue moving forward.
• The map below depicts Oceania and Indonesia. A.M. Best
considers Indonesia to be CRT-4, while the two countries
evaluated in Oceania, Australia and New Zealand, are CRT-1
and CRT-2, respectively.
Regional Summary: Oceania
• Oceania, whose largest two nations,
Australia and New Zealand, make up
the vast majority of economic activity,
is located in the South Pacific Ocean.
Australia and New Zealand have
strong political and cultural ties with
the United Kingdom.
• Australia and New Zealand have
close economic ties with Southeast
Asia. The entire region was established
as a Free Trade Area in 2009.
• The global economic slowdown
has impacted the region; however,
the impact has been much less severe
than that felt in Europe and North
America and a recovery is underway.
Economic Risk: Moderate
• The New Zealand economy was
traditionally based on the production
and export of agricultural products.
Growth in several industries including
food processing, tourism, filmmaking
and wine has helped to diversify the
economy. New Zealand has also come
to specialize in a number of niche
industries like boat building, food
processing technology, outdoor equipment,
and mountain bikes.
• In 2008 and 2009, as export demand
and tourism revenues declined, the
New Zealand economy fell into recession.
It rebounded in 2010, with GDP
growth of 1.5%. Growth has been
uneven and modest in 2011, at about
0.9%. The earthquake in February
2011 caused serious damage and
slowed economic activity.
Political Risk: Very Low
• Corruption is perceived as almost
nonexistent as New Zealand ranked
first out of 179 countries in Transparency
International’s Corruption Perceptions
Index in 2010.
• According to the World Bank, New
Zealand’s business environment is
ranked third in the world (behind Singapore
and Hong Kong) in terms of
ease of doing business.
• Amid concerns regarding weak tax
revenues and reconstruction costs, the
government aims to regain a fiscal surplus
by 2015.
Financial System Risk: Low
• The New Zealand insurance industry
is overseen by the Financial Markets
Authority (FMA), which commenced
operations in May 2011. The FMA is a
super-regulator and works in conjunction
with the Reserve Bank.
• New Zealand has undergone massive
reforms over the past 2 decades
transforming the economy to one that
is open and globally competitive.
• The banking sector weathered the
global financial crisis relatively well, but
risks remain due to banks’ exposure to
highly indebted households and housing
prices that are likely overvalued.
• The Country Risk Tier (CRT) reflects A.M. Best’s assessment
of three categories of risk: Economic, Political and
Financial System Risk.
• New Zealand is a CRT-2 country with moderate levels of
economic risk and low levels of political and financial system
risk.
• New Zealand’s economy entered into a recession in 2008.
A large decline in the housing market, coupled with the
global financial turmoil led to an economic contraction in
both 2008 and 2009. A mild and uneven economic recovery
has been underway in 2010 and 2011, which is expected to
continue moving forward.
• The map below depicts Oceania and Indonesia. A.M. Best
considers Indonesia to be CRT-4, while the two countries
evaluated in Oceania, Australia and New Zealand, are CRT-1
and CRT-2, respectively.
Regional Summary: Oceania
• Oceania, whose largest two nations,
Australia and New Zealand, make up
the vast majority of economic activity,
is located in the South Pacific Ocean.
Australia and New Zealand have
strong political and cultural ties with
the United Kingdom.
• Australia and New Zealand have
close economic ties with Southeast
Asia. The entire region was established
as a Free Trade Area in 2009.
• The global economic slowdown
has impacted the region; however,
the impact has been much less severe
than that felt in Europe and North
America and a recovery is underway.
Economic Risk: Moderate
• The New Zealand economy was
traditionally based on the production
and export of agricultural products.
Growth in several industries including
food processing, tourism, filmmaking
and wine has helped to diversify the
economy. New Zealand has also come
to specialize in a number of niche
industries like boat building, food
processing technology, outdoor equipment,
and mountain bikes.
• In 2008 and 2009, as export demand
and tourism revenues declined, the
New Zealand economy fell into recession.
It rebounded in 2010, with GDP
growth of 1.5%. Growth has been
uneven and modest in 2011, at about
0.9%. The earthquake in February
2011 caused serious damage and
slowed economic activity.
Political Risk: Very Low
• Corruption is perceived as almost
nonexistent as New Zealand ranked
first out of 179 countries in Transparency
International’s Corruption Perceptions
Index in 2010.
• According to the World Bank, New
Zealand’s business environment is
ranked third in the world (behind Singapore
and Hong Kong) in terms of
ease of doing business.
• Amid concerns regarding weak tax
revenues and reconstruction costs, the
government aims to regain a fiscal surplus
by 2015.
Financial System Risk: Low
• The New Zealand insurance industry
is overseen by the Financial Markets
Authority (FMA), which commenced
operations in May 2011. The FMA is a
super-regulator and works in conjunction
with the Reserve Bank.
• New Zealand has undergone massive
reforms over the past 2 decades
transforming the economy to one that
is open and globally competitive.
• The banking sector weathered the
global financial crisis relatively well, but
risks remain due to banks’ exposure to
highly indebted households and housing
prices that are likely overvalued.
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