A.M. Best Affirms Rating of Fidelity Life Assurance Company Limited.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of Fidelity Life Assurance Company Limited (Fidelity Life) (New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. ). The rating outlook is stable. The rating reflects Fidelity Life's consistent profitability, conservative investment portfolio and stable business growth. Fidelity Life has been experiencing stable profitability over the last five years, with its average annual return on equity at 14%. The Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. (BCAR BCAR Brunswick County Association of Realtors BCAR British Civil Airworthiness Requirements BCAR Bullitt County Animal Rescue (Shepherdsville, KY) BCAR Business Case Analysis Report BCAR Beaver Creek Array BCAR Buffalo Civic Auto Ramps, Inc. ), which measures capitalization on a risk-adjusted basis, demonstrates the company's moderate capital position. Fidelity Life's conservative investment strategy on non-linked assets has resulted in holdings of 85% in cash and fixed interest assets in fiscal year 2004. This asset allocation Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. is expected to provide Fidelity Life with a more stable income stream going forward. These positive factors are partially offset by Fidelity Life's tight but improving capitalization, increasingly competitive market for independent distribution position and relatively high lapse rate lapse rate n. The rate of decrease of atmospheric temperature with increase in altitude. lapse rate The rate of change of any meteorological phenomenon, especially atmospheric temperature with altitude. . Shareholder capital in excess of solvency margin requirements (free surplus) has remained relatively thin following the sizeable new business growth over the last few years. Furthermore, Fidelity Life's growth of more risk-related business is likely to be constrained by the company's capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Despite having taken various measures to foster higher business retention, the first year lapse rate is still positioned at a level higher than the industry average. This trend is in line with the challenges Fidelity Life faces, in terms of the quality of its distribution channels, namely through independent insurance intermediaries. However, the ongoing persistency rate is encouraging and consistent with the industry average. Fidelity Life will continue to face strong competition from the larger life insurers that have established economies of scale in marketing and product development within the market place. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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