Best’s News & Research Service - March 14, 2024 08:59 AM (EDT)
AM Best Affirms Credit Ratings of Fidelity Life Assurance Company Limited
- March 14, 2024 08:59 AM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Fidelity Life Assurance Company Limited (Fidelity Life Assurance) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Fidelity Life Assurance’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Fidelity Life Assurance’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is at the strongest level as of fiscal year-end (30 June) 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). The company has a robust capital management strategy that supports a solid regulatory solvency position, as well as the maintenance of risk-adjusted capitalisation at the strongest level over the medium term. 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 Limited. 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 1.0% (fiscal years 2019-2023). Over the past two fiscal years, operating earnings were dampened due to elevated integration and transaction costs associated with the acquisition of Westpac Life-NZ-Limited (subsequently renamed to Fidelity Insurance Limited [Fidelity Insurance]). However, AM Best expects operating performance metrics to improve prospectively, supported by scale efficiencies arising from the group’s increased operational size, as well as enhanced technological capabilities.
Fidelity Life Assurance ranks among the largest life insurance companies in New Zealand, recording significant premium growth following the acquisition of Fidelity Insurance in fiscal year 2022. The company’s product offerings include term life, disability income, trauma and total permanent disability insurance, with a legacy portfolio of investment-linked and traditional participating policies. The insurance policies are distributed predominantly through financial advisers and Westpac New Zealand Limited’s banking network, with an exclusive 15-year distribution arrangement with the bank.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.