The rating outlook, however, is revised to stable from negative.
"The stable outlook reflects Southern Cross' success in turning around its financial performance and its ability to maintain its strong market franchise," Standard & Poor's credit analyst Michael Vine says.
The ratings agency says that Southern Cross has successfully implemented and managed several initiatives, including a restructure of its premium rates, product adjustments, and claims processing system provements.
"The stable outlook also factors in the expectation that Southern Cross' underwriting performance will continue to trend positively and contribute to a stabilized operating performance in the medium term," Vine says.
The ratings reflect Southern Cross' continued strong market position in New Zealand's health care insurance market, underpinned by its strong brand and extensive distribution network throughout the country. By international standards, Southern Cross is a small company, operating in the small domestic market. The organisation's relatively small capital size and mutual status limits its protection against unforeseen adverse events.
Southern Cross group chief executive, Ian McPherson, said the ratings capped off a very satisfactory year.
During the 12 months ended June 30, the Society's operating result significantly improved and its balance sheet strengthened.
"The Standard & Poor's rating is further reinforcement that we are on track financially. Furthermore, we are the only entity in New Zealand that has a Standard & Poor's rating for its health insurance business and are amongst the highest rated health insurers in Australasia," he said in a statement.
McPherson says Southern Cross voluntarily intended to increase reserves.
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