Best’s News & Research Service - September 15, 2022 04:07 PM (EDT)
AM Best Affirms Credit Ratings of Fidelity Life Association, A Legal Reserve Life Insurance Company
- September 15, 2022 04:07 PM (EDT)
Oldwick //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 Association, A Legal Reserve Life Insurance Company (Fidelity Life) (Chicago, IL). FLA is a wholly owned subsidiary of Vericity, Inc. (Vericity).
The ratings reflect Fidelity Life’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’s risk-adjusted capitalization is assessed at the strongest level, as measured by the Best’s Capital Adequacy Ratio (BCAR), and supports the company’s insurance, business and investment risks. The company’s liquidity capability is good, supported by strong liquidity ratios, and its overall credit quality of invested assets is also good. AM Best notes that Fidelity Life’s allocations to commercial loans are elevated relative to its peers, but this portfolio has performed well. The negative outlooks reflect AM Best’s view that Fidelity Life’s operating performance will continue to be challenged in the short to mid-term with new business growth, related new business strain and investments in its information technology infrastructure. Reinsurance use is high, as the company prefers to use reinsurance instead of reserve financing as part of its capital structure.
The company’s premium growth has been robust, with five-year compound annual growth rates for direct premiums written significantly higher than the life industry average. However, a majority of Fidelity Life’s net premiums written are related to ordinary life products and have lapse rates relatively higher than the life industry average. Over a quarter of Fidelity Life’s total liabilities are interest-sensitive with a majority having no surrender charges and higher guarantees.
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 specializing 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.