Fidelity Life has had its financial strength rating of “A-” (Excellent) and long-term issuer credit rating of “a-” affirmed by ratings agency A.M. Best. The outlook for the firm is stable.
A.M. Best said the ratings reflect the firm’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Fidelity Life’s balance sheet strength is underpinned by risk-adjusted capitalization, which is maintained at the strongest level; the fact that its regulatory solvency margin has improved significantly; and that its business model is highly capital-intensive to operate.
Fidelity Life’s operating earnings are expected to remain positive, supported by steady revenue growth, adequate rates for its in-force portfolio and a stable stream of investment income, A.M. Best said.
“The company also has a low to moderate product risk profile, with a majority of its in-force premium related to mortality risk; the remainder is mostly income protection and trauma,” it noted. “However, the company remains reliant on independent distributors to distribute its products.
“For certain lines of business, the company continues to face a challenging environment due to fierce competition, especially for mortality risk products.”
Fidelity Life is well-positioned for its current rating level. Negative rating actions may occur, and downward rating pressure could occur, if the company experiences difficulties in reaching its targeted surplus, the agency noted.
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