AM Best has removed from under review with negative implications and affirmed the credit ratings of Fidelis Insurance Holdings Limited and its subsidiaries.
AM Best has removed from under review with negative implications 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 removed from under review with negative implications and affirmed the Long-Term ICR of “bbb” (Good) of Fidelis Insurance Holdings Limited (Bermuda), the ultimate holding company.
Concurrently, AM Best has removed from under review with negative implications 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 outlook assigned to these ratings is negative.
According to AM Best, the ratings reflect Fidelis’ balance sheet strength, which the agency assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Fidelis announced in the summer of 2022 its intention to create Fidelis MGU, which would be bifurcated from the existing Fidelis companies.
The deal was approved by regulators back in November of 2022 and became effective at the beginning of this month.
AM Best notes Fidelis MGU will be located at Waterloo House in Bermuda, 22 Bishopsgate in London, and the Station Building II in Dublin, and that it will be led by most of the previous senior management of Fidelis.
In turn, Fidelis will be led by a combination of other in-house executives supplemented by several experienced senior executives from outside the organisation.
As a result, the ratings agency writes, “The negative outlooks reflect the organisational changes that may impact the group’s business profile assessment if there is disruption in its market acceptance.
“AM Best will monitor Fidelis’ market presence, as well as subsequent operating performance to assess if there is any material deterioration.”
Best adds that negative rating actions may arise if the group’s business profile is adversely affected by changes in the organisational structure or if its operating performance deteriorates significantly.
The ratings could also be impacted negatively by a reduction in the group’s risk-adjusted capital position driven by operating losses or a significant return of capital relative to earnings.
In other related news from this month, US primary insurer Travelers recently disclosed that its strategic minority investment in Fidelis from July of 2021 includes a 20% quota share arrangement, which its management says will allow Travelers to “participate in the hard market.”