Specialty reinsurer's ratings lifted – what's behind the revision?

Management's performance key, credit agency says

Specialty reinsurer's ratings lifted – what's behind the revision?


By Kenneth Araullo

AM Best has lifted the outlooks for re/insurance group Fidelis Insurance Bermuda and its affiliates to stable from negative following closer assessment of its newly established sub-entity.

The previous negative outlook issued in 2023 was largely due to the operational risks associated with the establishment of Fidelis MGU, a managing underwriting entity expected to transition key executives from Fidelis. Concerns included the entity’s market integration and acceptance.

However, AM Best has since recognized the effective management and strategic relationship between Fidelis and Fidelis MGU over the past year, evidenced by sustained operating profitability and strong risk-adjusted capitalization.

This adjustment, AM Best explained, applies to Fidelis (Bermuda), Fidelis Underwriting Limited (United Kingdom), and Fidelis Insurance Ireland Designated Activity Company (Ireland). Additionally, the outlook for the long-term ICR of “bbb” (Good) for Fidelis Insurance Holdings Limited (Bermuda), the parent company, has also been revised to stable from negative.

AM Best has concurrently affirmed the long-term issue credit rating of “bb+” (Fair) for Fidelis Insurance Holdings Limited’s $304 million 9% preference shares, with $58 million currently outstanding, due in 2050.

The ratings reflect Fidelis’ robust balance sheet strength, characterized by AM Best as very strong, along with its satisfactory operating performance, neutral business profile, and effective enterprise risk management (ERM) practices.

AM Best also highlighted the company’s operating performance, which is marked by steady underwriting profits and investment income, with profitability metrics improving over the past five years. A combined ratio lower than its peers highlights disciplined underwriting practices, enhanced by a diversified business model and selective underwriting capabilities via Fidelis MGU.

Operating on a global scale, Fidelis offers specialty insurance, reinsurance, and retrocession products.

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