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AM Best Affirms Credit Ratings of Fidelity Insurance Limited

SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Fidelity Insurance Limited (Fidelity Insurance) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Fidelity Insurance’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. The ratings also factor in a neutral impact from the company’s ultimate ownership by Fidelity Life Assurance Company Limited (Fidelity Life Assurance).

Fidelity Insurance’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strongest level as of fiscal year end (ending 30 June) 2022, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite elevated dividend payouts, Fidelity Insurance has maintained robust regulatory solvency coverage as a result of prudent capital management and increased utilisation of reinsurance. However, high reliance on third-party reinsurance is viewed as a partial offsetting balance sheet factor. AM Best views the company’s investment strategy to be conservative, with a focus on cash and high-quality fixed-income securities.

AM Best views Fidelity Insurance’s operating performance as adequate, driven by robust underwriting performance of the company’s in-force life insurance business, with generally favourable claims experience and a low expense ratio. In fiscal year 2022, operating earnings were impacted adversely by rising interest rates and increased infrastructure, staffing and integration costs following its acquisition by Fidelity Life Assurance on 28 February 2022. As a result, fiscal year 2022 net income fell to NZD 12.9 million compared with NZD 44.1 million in fiscal year 2021. However, overall earnings are expected to remain supportive of an adequate operating performance assessment.

The business profile assessment reflects Fidelity Insurance’s position as a medium-sized insurer in New Zealand’s life insurance industry, with a market share of approximately 6% based on in-force gross written premium. The company benefits from a strong distribution network driven by the establishment of an exclusive 15-year arrangement with Westpac New Zealand Limited (WNZL) to distribute Fidelity Insurance’s products to its retail customers.

Fidelity Insurance is viewed as strategically important to Fidelity Life Assurance as it contributes to the group’s operational scale and market share, as well as diversifying its distribution channels through the bancassurance arrangement with WNZL. Following its acquisition by Fidelity Life Assurance, the company continues to operate as a subsidiary, although its asset and liabilities are expected to be transferred to its parent, subject to regulatory approval. Following this, Fidelity Insurance is expected to cease insurance operations.

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. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Yi Ding
Senior Financial Analyst
+65 6305 5021
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Michael Dunckley
Director, Analytics
+65 6303 5020
[email protected]

Al Slavin
Senior Public Relations Specialist
+1 908 439 2200, ext. 5098
[email protected]

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