What the ratings agency said about Fidelity Life

AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating, also of A-, of Fidelity Life Assurance. The outlook of these credit ratings (ratings) is stable.

The ratings reflect Fidelity Life’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Fidelity Life’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which AM Best expects to remain at the strongest level over the medium term. The company’s financial flexibility is viewed to have improved since 2018, following a capital injection of $75 million by the New Zealand Superannuation Fund, to support future business growth.

AM Best notes that while the capital injection strengthened the company’s local regulatory solvency position, Fidelity has experienced some volatility in capital adequacy over recent years. AM Best expects prospective regulatory solvency to remain robust over the medium term, albeit sensitive to new business growth initiatives. A partially offsetting balance sheet factor remains the company’s dependence on third-party reinsurance, with over 40% of gross written premiums (GWP) ceded to reinsurers in fiscal-year 2019.