AM Best upgrades Fidvest rating to A
AM Best has upgraded the financial strength rating to A from A- and the long-term issuer credit ratings to “a” (Excellent) from “a-” (Excellent) of Fidvest US. The outlook of these ratings has been revised to stable from positive.
The ratings reflect Fidvest’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Fidvest is a pure captive insurance company wholly owned by FMR LLC (FMR), the parent company of Fidelity Investments.
The rating upgrade reflects continued improvement in the company’s operating performance since 2021, which has resulted in AM Best’s current assessment of adequate. The stable outlook is driven by AM Best’s expectation that the company’s operating performance will continue to be sustained at such levels. Following a period of underwriting volatility, management has instituted several correcting initiatives that have stabilized Fidvest’s operating results such as pricing adjustments, enhanced reserving practices and revised limits and retentions. Improved underwriting profitability has been noted since that time and organic surplus growth has been achieved. Going forward, AM Best will continue to monitor trends in Fidvest’s underwriting performance and overall operating results.
Fidvest maintains a very strong level of balance sheet strength, reflective of its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment risk profile and strong liquidity position. Partially offsetting these factors is the volatility in Fidvest’s loss reserve balances related to professional liability claims and related litigation expenses.
AM Best added that it assesses Fidvest’s business profile as limited, as it covers professional liability, workers’ compensation, property, automobile liability, general liability and cyber coverage for its parent in the form of deductible reimbursement and high excess policies. Fidvest maintains an ERM structure that is appropriate for a company of its size, and as a part of FMR, also benefits from and is an integral part of the parent company’s ERM framework. In addition, the ratings receive lift from its parent, FMR, a large and diversified financial services organization. The enhancement considers Fidvest’s strategic importance to FMR, as well as FMR’s ability to provide financial flexibility to Fidvest should it become necessary.
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