17 March 2021

AM Best awards rating to Fidelity Investments’ captive, Fidvest

AM Best has assigned a financial strength rating of A- (excellent) to Fidvest, a Bermuda-based pure captive insurance company wholly owned by Fidelity Investments, with a stable outlook.

Fidvest writes professional liability, workers’ compensation, property, automobile liability, general liability and cyber coverage for its parent in the form of deductible reimbursement policies.

The rating reflects Fidvest’s very strong balance sheet, its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). The captive received a one notch rating enhancement from its ultimate parent.

Fidvest has the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio (BCAR). Its conservative investment risk profile and strong liquidity position also support its balance sheet strength, though volatility in loss reserve balances in recent years did mark its BCAR down.

Fidvest’s operating performance is marginal because loss costs have exceeded premium revenue, resulting in negative operating results and return measures that compare unfavorably with its composite peers. This in part reflects the business it has taken on, AM Best said, with its working layer deductible programme being subject to higher loss frequency. Professional liability claims and related litigation expenses have caused elevated combined ratios over the past several years.