AM Best gives Fidelis ratings the thumbs up
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Fidelis Insurance Bermuda and Fidelis Underwriting (Fidelis UK) (United Kingdom).
AM Best also has affirmed the Long-Term ICR of “bbb-” of Fidelis Insurance Holdings (Bermuda), the ultimate holding company. Concurrently, AM Best has affirmed the Long-Term ICR of “bb” on Fidelis Insurance Holdings $304 million ($248.7 million currently outstanding) 9 percent cumulative preference shares, due in 2050. The outlook of these credit ratings is stable.
According to AM Best the ratings reflect the Fidelis' balance sheet strength, which the rating agency categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Fidelis’ very strong level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, strong liquidity and financial flexibility contribute to AM Best’s balance sheet assessment of very strong. Fidelis generated underwriting profit in 2016, its first full year of operation, and continued this positive trend in 2017.
Additionally, the underwriting gains are supplemented by a healthy fee income generated through Fidelis’ various partnerships. The profits are partially offset by the losses generated by Fidelis’ investment portfolio; however, in mid-2017, the group revised its investment strategy to hold the majority of its assets in fixed-income securities and cash and cash equivalents, with a small allocation to alternative investments. Healthy investment income is projected going forward. Fidelis’ overall operating performance is assessed as adequate.
AM Best views Fidelis’ business profile as neutral. Fidelis is a global provider of specialty insurance and reinsurance products through its two wholly-owned subsidiaries - Fidelis Insurance Bermuda and Fidelis Underwriting. While AM Best categorises Fidelis as still in its start-up phase and is one of the newest Bermuda players, the rating agency said that the group demonstrated strong acceptance by the market, as evidenced by the stable and consistent year-over-year growth. The group has a strong senior management team with an excellent reputation and a proven track record.
