A.M. Best has assigned a financial strength rating of “A- (Excellent)” and an issuer credit rating (ICR) of "a-" to Fidelis Insurance Bermuda.
The agency has also assigned an ICR of "bbb-" to Fidelis's holding company, Fidelis Insurance Holdings and a debt rating of "bb" to its $292 million, 9 percent cumulative preference shares due 2050. The outlook assigned to all ratings is stable.
Both companies are domiciled in Hamilton, Bermuda.
The rating of Fidelis is based on what the agency called: “Its excellent projected risk-adjusted capital position, prudent business plan and knowledgeable management team.”
Partially offsetting these positive factors are the start-up nature of the company, the investment risk associated with the company's alternative investment strategy, as well as the competitive conditions and excess capacity in the reinsurance marketplace that may challenge the execution of the business plan.
The rating is supported by an amount of capital that has met A.M. Best's stringent requirements for newly formed companies. Fidelis will operate as a Bermuda-based insurer and reinsurer writing a global property insurance and reinsurance portfolio.
A.M. Best has stated that that Fidelis's underwriting risk, coupled with its alternative investment strategy, creates an elevated risk profile that could adversely influence the company's risk-adjusted capitalisation.
Mitigating these concerns is the prudent underwriting leverage contemplated in Fidelis's business plan and the diversified, multi-manager investment strategy.
The company’s assets will be managed by eight investment advisers who are registered with the Securities and Exchange Commission, with assistance from Goldman Sachs Alternative Investments Manager & Selection (AIMS) Group.
AIMS manages $150 billion in client assets and has a staff of over 300 professionals worldwide. Fidelis's assets will be held in fund-of-one portfolios or separately managed accounts.
According to A.M. Best, factors that could result in positive rating actions would be Fidelis meeting or exceeding its business plan over the long term.
The agency has also confirmed that it could downgrade the ratings or revise the outlook if the company's Best's Capital Ratio declines, its operating performance and risk profile deteriorates or if losses from claims or investments deteriorate capital.
