Fidelity Life excellence rating 27th consecutive year

[UPDATED] Fidelity Life has marked its 27th year in a row for an A- (excellent) financial strength rating from credit rating agency AM Best. AM Best comments added

Monday, March 20th 2023, 2:04PM

by Kerry Meadows-Bonner

AM Best also affirmed the A- (excellent) financial strength rating for Fidelity Insurance, the former Westpac Life business acquired by Fidelity Life last year.

AM Best assigns A- to insurance companies it believes have an excellent ability to meet their ongoing insurance obligations.The outlook for both ratings is stable.

According to the credit rating agency, the financial strength ratings reflect each entity’s respective ‘very strong’ balance sheet, adequate operating performance, neutral business profile and appropriate enterprise risk management.

Fidelity Life group chief financial officer Simon Pennington says,“These ratings are an important trust indicator for our customers and our advisers because they provide an expert, independent view of our financial strength and ability to pay claims.”

Fidelity Life Assurance’s balance sheet strength assessment is underpinned by its consolidated risk-adjusted capitalisation, which AM Best expects to remain at the strongest level over the medium term, as measured by its capital adequacy ratio.

"Despite significant underwriting growth following the acquisition of Westpac Life, AM Best expects the company’s consolidated regulatory solvency position to be maintained at an appropriate level, supported by a robust post-acquisition capital management strategy.

"AM Best also views Fidelity Life Assurance as having good financial flexibility, supported by its two largest shareholders, NZ Superannuation Fund and Ngāi Tahu Holdings Corporation. A partially offsetting balance sheet strength factor is Fidelity Life Assurance’s high reliance on third-party reinsurance."

"AM Best assesses Fidelity Life Assurance’s operating performance as adequate, with a five-year average return-on-equity ratio of 1.8% (fiscal years 2018-2022). In fiscal year 2022, the company’s operating results were dampened by higher discount rates, as well as integration and transaction costs associated with the acquisition of Fidelity Insurance. However, AM Best expects operating performance metrics to remain at an adequate level over the medium term, supported by scale efficiencies arising from the group’s increased operational size, as well as technology capability.

Fidelity Life has recorded significant premium growth following the acquisition of Fidelity Insurance (Westpac Life).

"AM Best views the establishment of an exclusive 15-year bancassurance distribution arrangement with Westpac to have diversified Fidelity group’s distribution capabilities, previously concentrated on the capital-intensive financial adviser channel."

Tags: Fidelity Life