Best’s News & Research Service - February 22, 2024 02:00 PM (EST)
AM Best Revises Outlooks to Stable for Fidelis Insurance Holdings Limited and Its Subsidiaries
- February 22, 2024 02:00 PM (EST)
//BestWire// - AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of Fidelis Insurance Bermuda Limited (Fidelis) (Bermuda), Fidelis Underwriting Limited (United Kingdom) and Fidelis Insurance Ireland Designated Activity Company (Ireland). In addition, AM Best has revised the outlook to stable from negative and affirmed the Long-Term ICR of “bbb” (Good) of Fidelis Insurance Holdings Limited (Bermuda), the ultimate holding company. Concurrently, AM Best has revised the outlook to stable from negative and affirmed the Long-Term Issue Credit Rating of “bb+” (Fair) of Fidelis Insurance Holdings Limited’s $304 million ($58 million currently outstanding) 9% preference shares, due 2050.
The Credit Ratings (ratings) reflect Fidelis’ 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 (ERM).
The negative outlook AM Best placed on the ratings in 2023, was based on the execution risk related to the creation of Fidelis MGU, a new managing underwriting entity. This entity would see key executives from Fidelis moved to this new entity, and risks of its acceptance into the market. AM Best has assessed the performance of the Fidelis management team and the strength of the business relationship between Fidelis and Fidelis MGU over the last year, which has been demonstrated through its financial stability. Fidelis has reported continuing operating profitability and robust risk-adjusted capitalization.
The very strong balance sheet strength is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), where absolute capital has been underpinned by consistent favorable earnings. The balance sheet assessment is also supported by prudent loss reserves, which have been showing favorable prior year development, since inception. Liquidity measures remains solid, supported by a high credit quality fixed income portfolio, which comprises the majority of investment assets, with a small allocation to alternative investments. Return on equity has been well above peers even during volatile cycles.
Fidelis' operating performance has been supported by consistent underwriting gains and investment returns. Profitability metrics have improved over the last five years with a combined ratio below its peers driven by disciplined underwriting, which has benefited from a diversified business platform. Scale and access to highly selective underwriting capabilities through Fidelis MGU gives Fidelis the ability to be cautiously opportunistic.
Fidelis is a provider of specialty insurance, reinsurance and retrocession products with a global geographic reach. The company has received acceptance by the market over the years as evidenced by its significant premium growth and increased market share. The group has a strong senior management team with vast industry experience and a proven track record.
ERM is supported by robust governance frameworks that monitors and reviews business risks. Fidelis has established a comprehensive framework with defined functions and key performance indicators to oversee and validate Fidelis MGU.
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.