Prospects brighten for Fidelity Life Assurance's operating performance

The company's financial flexibility is bolstered by its two largest shareholders, said AM Best.

Fidelity Life Assurance is projected to upgrade its operating performance metrics, boosted by scale efficiencies rooted from the group’s increased operational size, as well as enhanced technological capabilities, AM Best said.

Firstly, Fidelity Life Assurance demonstrates very strong balance sheet strength, supported by robust risk-adjusted capitalization measured by Best’s Capital Adequacy Ratio (BCAR). 

The company's capital management strategy ensures a solid regulatory solvency position and maintains risk-adjusted capitalization at the strongest level over the medium term. 

Whilst the reliance on third-party reinsurance is noted, the company's financial flexibility is bolstered by its two largest shareholders, NZ Superannuation Fund and Ngāi Tahu Holdings Corporation Limited.

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Secondly, Fidelity Life Assurance's operating performance is deemed adequate, with a five-year average return-on-equity ratio of 1.0%. 

The integration and transaction costs associated with the acquisition of Fidelity Insurance Limited impacted operating earnings in recent fiscal years. 

Thirdly, Fidelity Life Assurance holds a significant position in the New Zealand life insurance market, particularly following the acquisition of Fidelity Insurance. 

Its diverse product offerings include various life insurance policies distributed through financial advisers and Westpac New Zealand Limited’s banking network under an exclusive distribution arrangement.