Fidelity Life has rating confirmed

Fidelity Life has had its A- (Excellent) financial strength rating reaffirmed by AM Best, for the 19th consecutive year.

Friday, February 13th 2015, 3:09PM

“This excellent financial strength rating again reflects a consistent show of confidence in Fidelity Life, which has continued for close to two decades. A.M. Best has also declared our long-term outlook as stable, which provides continuing confidence for our customers,” Fidelity Life chief executive Milton Jennings says.

The affirmations reflect Fidelity Life’s adequate risk-based capitalisation, favourable liquidity position and consistent operating results.

AM Best says the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of Fidelity Life both have "stable" outlook.

The affirmations reflect Fidelity Life's adequate risk-based capitalisation, favourable liquidity position and consistent operating results, the agency says.

"Fidelity Life continues to maintain an adequate level of capitalisation to support its risk profile, as measured by Best's Capital Adequacy Ratio (BCAR). The operation also maintains excellent liquidity to meet its obligations, backed by both positive operating cash flows and favourable liquidity ratios. Over the past five years, net profits have been consistently positive.

"Operating results have benefited from a stable stream of earnings from its high-quality investment portfolio, as well as the consistent production of profits from its in-force portfolio."

Offsetting rating factors include the company's capital-intensive business model, competitive landscape and high reinsurance leverage.

"Fidelity Life remains reliant on financial advisers to generate its new business, which makes the company's operating model very capital intensive. In addition, the environment of the New Zealand life insurance market—particularly in the adviser channel—remains highly competitive. Competitive pressure is likely to continue putting pressure on Fidelity Life's new business profitability.

Fidelity Life is well positioned at its current rating level. Downward pressure on the ratings could result if there is a significant deterioration in profitability, or if the company experiences difficulty to meet its target surplus policy.

Tags: Fidelity Life Milton Jennings Ratings