Our financial strength rating: A- u (Excellent).

Our financial strength rating: A- u (Excellent).

Our financial strength rating: A- u (Excellent).

Fidelity Life has maintained an A- (Excellent) financial strength rating from A.M. Best since December 1996.

On 8 July 2021 A.M. Best placed this rating under review with developing implications, as indicated by the ‘u’ shown above. This follows our announcement on 6 July 2021 that we’ve signed a conditional agreement to buy Westpac Life for $400 million, and enter into a 15-year strategic alliance with Westpac NZ to distribute our products exclusively to their retail customers.

Our largest shareholder the NZ Super Fund and new investor Ngāi Tahu Holdings will fund the majority of the acquisition.

The agreement is subject to regulatory and Fidelity Life shareholder approvals and is expected to be completed by the end of 2021.

The rating will remain under review pending completion of the agreement, and until A.M. Best can complete its assessment of the acquisition and funding structure.

AM Best's Financial Strength Rating (FSR) Scale.

Rating categories Rating symbols Rating notches*

Category definitions

Superior A+ A++ Assigned to insurance companies that have, in our opinion, a superior ability to meet their ongoing insurance obligations.
Excellent A A- Assigned to insurance companies that have, in our opinion, an excellent ability to meet their ongoing insurance obligations.
Good B+ B++ Assigned to insurance companies that have, in our opinion, a good ability to meet their ongoing insurance obligations.
Fair B B- Assigned to insurance companies that have, in our opinion, a fair ability to meet their ongoing insurance obligations. Financial strength is vulnerable to adverse changes in underwriting and economic conditions.
Marginal C+ C++ Assigned to insurance companies that have, in our opinion, a marginal ability to meet their ongoing insurance obligations. Financial strength is vulnerable to adverse changes in underwriting and economic conditions.
Weak C C- Assigned to insurance companies that have, in our opinion, a weak ability to meet their ongoing insurance obligations. Financial strength is very vulnerable to adverse changes in underwriting and economic conditions.
Poor D - Assigned to insurance companies that have, in our opinion, a poor ability to meet their ongoing insurance obligations. Financial strength is extremely vulnerable to adverse changes in underwriting and economic conditions.

*Each Best's Financial Strength Rating Category from "A+" to "C" includes a Rating notch to reflect a gradation of financial strength within the category. A Rating notch is expressed with either a second plus "+" or a minus "-".

AM Best's Financial Strength Non-Rating Designations.

Designation symbols Designation definitions
E Status assigned to insurers that are publicly placed, via court order into conservation or rehabilitation, or the international equivalent, or in the absence of a court order, clear regulatory action has been taken to delay or otherwise limit policyholder payments.
F Status assigned to insurers that are publicly placed via court order into liquidation after a finding of insolvency, or the international equivalent.
S Status assigned to rated insurance companies to suspend the outstanding FSR when sudden and significant events impact operations and rating implications cannot be evaluated due to a lack of timely or adequate information; or in cases where continued maintenance of the previously published rating opinion is in violation of evolving regulatory requirements.
NR Status assigned to insurance companies that are not rated; may include previously rated insurance companies or insurance companies that have never been rated by AM Best.

Our solvency margin.

The solvency margin of Fidelity Life as at 31 December 2020 was $49.3m, made up as follows:

 

Statutory Fund

($000's)

Non-Statutory Fund

($000's)

Total Fidelity Life

($000's)

Actual Solvency Capital 293,774 24,752 318,526
Minimum Solvency Capital 266,612 2,634 269,246
Solvency Margin 27,162 22,118 49,280
Solvency Ratio 110% 940% 118%

Actual solvency capital and Minimum solvency capital are determined in accordance with the RBNZ solvency standard for life insurance business, 2014.

Minimum solvency capital is the minimum amount of capital that must be held by a licensed life insurer.

Actual solvency capital is the amount of equity less deductions from capital held to meet solvency.

The solvency margin is actual solvency capital less minimum solvency capital.

The solvency ratio is actual solvency capital as a proportion of minimum solvency capital.

Fidelity Life Statutory Fund No.1

Section 82 of the Insurance (Prudential Supervision) Act 2010 ("IPSA") requires a life insurer to have at least one statutory fund. A statutory fund is a fund established in the records of a life insurer and relates solely to the life insurance business of the life insurer or a particular part of that business.

The principal obligations of the statutory fund requirements are that:

  • all amounts received by a life insurer in respect of the business of a fund must be credited to the fund;
  • all assets and investments related to the business of a fund must be included in the fund;
  • all liabilities (including policy liabilities) of the life insurer arising out of the conduct of the business of a fund must be treated as liabilities of the fund;
  • the assets of a fund are only available for expenditure related to the conduct of the business of the fund;
  • funds may not be restructured or terminated without the approval of the Reserve Bank of New Zealand; and
  • profits and losses of a fund may only be dealt with in accordance with IPSA sections 112 to 115 and the associated regulations.

Policies that meet the definition of life policy under IPSA sections 84 and 85 must be referred to a statutory fund.