AM Best Affirms Credit Ratings of Fidelity & Guaranty Life Holdings, Inc. and Its Life/Health Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) of Fidelity & Guaranty Life Insurance Company (Des Moines, IA) and Fidelity & Guaranty Life Insurance Company of New York (New York, NY). These subsidiaries of Fidelity & Guaranty Life Holdings, Inc. (FGLH) (Delaware), are referred to collectively as Fidelity & Guaranty Life Group (FGL). The outlook of these Credit Ratings (ratings) is stable. In addition, AM Best has affirmed the Long-Term ICR of “bbb” (Good) of FGLH. The outlook of this rating is stable. At the same time, the Long-Term Issue Credit Rating of “bbb” (Good) with a stable outlook was withdrawn due to an early redemption on the $550 million 5.5% senior unsecured notes.

The ratings reflect FGL’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.

FGL maintains a very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), based on the retention of favorable earnings and capital contributions from its parent, Fidelity National Financial, Inc. (FNF) that support the growth in its operations. FGL maintains adequate liquidity due to strong operating cash flows and substantial surrender protection on its inforce annuity blocks of business. In addition, FGL has financial flexibility, with access to the financial markets through its holding company, F&G Annuities and Life, Inc. AM Best also notes the continued commitment from FNF, with its 85% ownership in FGL.

While risk-adjusted capital remains very strong, the group’s overall quality of capital is diminished by the recent increase in reinsurance leverage, the use of captive financial solutions, and the use of surplus notes. AM Best does note, however, that FGL uses highly rated reinsurers.

The recent rating upgrades in 2023 reflected FGL’s expanded business profile and continued support from FNF in the form of capital contributions. FGL has maintained a top five market position within its core fixed-indexed annuity segment within the independent agent channel. Strong sales continue to be enhanced by growth in other distribution channels that include regional banks and broker dealers. In addition, FGL continues to expand its presence in the institutional markets with its pension risk transfer and FABN solutions. FGL also has experienced favorable growth in its indexed universal life insurance business.

The group has experienced some volatility within its statutory net operating results. Interest rate spreads, however, have remained favorable due to strong investment yields, which have benefited from the rise in interest rates and the repositioning of the investment portfolio into higher-yielding structured securities. AM Best expects overall statutory and GAAP operating results to stabilize over the near to medium term due to gains in economies of scale as the company continues to grow premiums, while maintaining current interest rate spreads within its core fixed annuity business.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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