Fidelity Insurance Credit Ratings affirmed - AM Best

KUALA LUMPUR, March 16 (Bernama) -- The United States-headquartered AM Best has affirmed New Zealand’s Fidelity Insurance Limited (Fidelity Insurance) Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent).

The Credit Ratings (ratings), which have a stable outlook reflect Fidelity Insurance’s balance sheet strength, that AM Best assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

AM Best in a statement said the ratings also factored in a neutral impact from the company’s ultimate ownership by Fidelity Life Assurance Company Limited (Fidelity Life Assurance).

Fidelity Insurance’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strongest level as of fiscal year (ending June 30) 2022, as measured by Best’s Capital Adequacy Ratio.

Despite elevated dividend payouts, Fidelity Insurance has maintained robust regulatory solvency coverage as a result of prudent capital management and increased utilisation of reinsurance.

AM Best viewed Fidelity Insurance’s operating performance as adequate, driven by robust underwriting performance of the company’s in-force life insurance business, with generally favourable claims experience and a low expense ratio.

In fiscal year 2022, operating earnings were impacted adversely by rising interest rates and increased infrastructure, staffing and integration costs following its acquisition by Fidelity Life Assurance on Feb 28, 2022.

As a result, fiscal year 2022 net income fell to NZ$12.9 million compared with NZ$44.1 million in fiscal year 2021. However, overall earnings are expected to remain supportive of an adequate operating performance assessment. (NZ$1 = RM2.77)

The company benefits from a strong distribution network driven by the establishment of an exclusive 15-year arrangement with Westpac New Zealand Limited (WNZL) to distribute Fidelity Insurance’s products to its retail customers.

-- BERNAMA