AM Best Upgrades Credit Ratings of Fidelity & Guaranty Life Holdings, Inc. and Its Life/Health Subsidiaries
AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings to “a” (Excellent) from “a-” (Excellent) of
The ratings reflect FGL’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.
The rating upgrades reflect FGL’s expanding business profile and the diversification benefits provided by Fidelity National Financial, Inc. (FNF), which also guarantees the group’s
FGL maintains a very strong level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR) due to the retention of favorable earnings and the aforementioned capital contributions from its parent. FGL also maintains adequate liquidity due to strong operating cash flows and good surrender protection on its inforce annuity blocks of business. In addition, FGL has good financial flexibility, with access to the financial markets through its holding company,
While risk-adjusted capital remains very strong, the group’s overall quality of capital is diminished by the significant increase in reinsurance leverage, the use of captive financial solutions, as well as the use of surplus notes. However, AM Best notes that FGL generally uses highly rated reinsurers.
The group has also experienced some volatility within its statutory net operating results due to reinsurance transactions, impacts from market volatility and other one-time events. However, interest rate spreads have remained favorable due to strong investment yields, which have benefited from the rise in interest rates and the repositioning of the investment portfolio into higher yielding structured securities. AM Best expects overall statutory and GAAP operating results to improve over the near to medium term due to gains in economies of scale as the company continues to grow premiums, while maintaining current interest rate spreads within its core fixed annuity business.
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
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Source: AM Best
Wells Fargo & Company current report on Form 10-K
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