1 Comment 1 CommentThe ratings agency also noted that Fidelity had seen improving lapse rates and experience profits.
"Consistent profitability and high earnings retention have helped the company to continuously grow its capital position the past five years. Fidelity Life's capital position increased by 15% to $129 millin the year ending June 2011, while underwriting and asset risks remained relatively stable," AM Best says.
"As a result, the company's risk-adjusted capitalisation strengthened during the year."
"Fidelity Life saw an improvement in its lapse rates during fiscal year 2011, reflecting a decline in the overall market lapse rate, as well as Fidelity Life's commission and pricing structure that is aimed at rewarding persistency.
"Experience profits turned positive during the year. Together with planned profit margins and continued positive investment experience this helped the company to increase net profits to $18 million in 2011.
"Partially offsetting these positive rating factors is the impact of competitive pressure on Fidelity Life and the subdued economic environment on its prospective profitability."
AM Best says that competition is increasing in the independent adviser channel and that could adversely impact Fidelity Life's policy acquisition costs, lapse ratios and profitability going forward.
"The subdued economic environment could constrain Fidelity Life's ability to grow in an environment with higher regulation and taxation costs."
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