Reuters logo
Fitch Affirms Fidelity & Guaranty Life's IFS at 'BBB'; Upgrades IDR and Senior Debt
November 30, 2017 / 10:44 PM / in 17 days

Fitch Affirms Fidelity & Guaranty Life's IFS at 'BBB'; Upgrades IDR and Senior Debt

(The following statement was released by the rating agency) NEW YORK, November 30 (Fitch) Fitch Ratings has affirmed the 'BBB' Insurer Financial Strength (IFS) ratings for Fidelity & Guaranty Life Insurance Company and Fidelity & Guaranty Life Insurance Company of New York (collectively F&G Life). Fitch has also upgraded the Issuer Default Rating (IDR) assigned to Fidelity & Guaranty Life Holdings, Inc., (FGLH) to 'BB+' and the senior unsecured note rating to 'BB' following completion of the acquisition. Fitch has assigned a Stable Outlook to all ratings. A complete list of rating actions follows at the end of this release. KEY RATING DRIVERS Today's rating action follows the company's announcement that it has successfully been acquired by a consortium made up primarily of the founders of CF Corporation (CF Corp.), a special purpose acquisition company, funds affiliated with Blackstone, and Fidelity National Financial in an all-cash transaction valued at approximately $1.8 billion. The upgrade of FGLH's IDR and senior unsecured debt ratings reflect the company's improved financial flexibility under new ownership. Previously, FGLH's ratings reflected non-standard (i.e., wider) notching from the IFS rating as a result of the rating and financial profile of its highly leveraged former parent, HRG Group Inc. (HRG; 'B' IDR). Given the absence of high leverage and more normalized financial flexibility of the company following completion of the transaction, FGLH's ratings were upgraded to reflect standard notching from the IFS ratings. Fitch's ratings for F&G Life continue to reflect the company's relatively narrow product focus and liability profile, strong balance sheet profile, and good operating performance. The ratings also consider the competitive and regulatory challenges tied to the company's strategic focus selling fixed indexed annuities (FIAs) through independent marketing organizations (IMOs), and macroeconomic challenges associated with low interest rates. Fitch believes that longer term, F&G Life's credit profile could improve based on the successful execution of the company's strategies to improve financial performance and investment results under new ownership. F&G Life's strong balance sheet profile reflects the company's strong statutory capitalization, moderate leverage, and good asset quality. The company's year-end 2016 RBC of 412% was strong for the rating category. F&G Life's PRISM capital model score is on the high end of 'Adequate', which is within expectations for its current rating category. F&G Life's financial performance and balance sheet fundamentals remain in line with rating expectations. Operating performance for fiscal year 2017 was good and results have been consistent over the past two years. Stable performance on the investment portfolio as well as the maintenance and widening of net investment spreads, from a combination of reducing crediting rates and asset mix repositioning, have supported overall profitability. Fitch expects the full implementation of the Department of Labor (DOL) fiduciary rule will have a negative impact on the sale of FIAs in qualified markets. While Fitch does not see this as an immediate rating issue, the DOL rules may cause changes in operating strategies that could impact F&G Life's risk profile and ratings longer-term. RATING SENSITIVITIES The following could result in an upgrade of F&G Life's ratings: --The company maintains operating ROEs above 10% on a consistent basis and consolidated RBC above 400%; --Prism capital model score remains on the high end of 'Adequate'; --Fixed charge coverage is at least 8x and financial leverage is below 25%. The following could result in a downgrade of F&G Life's ratings: --F&G Life's consolidated RBC ratio falling below 300% with operating leverage above 20x; --Consolidated financial leverage for F&G Life exceeding 35%; --Fixed charge coverage falling below 5x; --Operating ROE below 5% over four consecutive quarters. Fitch has affirmed the following ratings: Fidelity & Guaranty Life Insurance Company Fidelity & Guaranty Life Insurance Company of New York --IFS rating at 'BBB'. Fitch has upgraded the following ratings: Fidelity & Guaranty Life Holdings, Inc. --Long-term IDR upgraded to 'BB+' from 'BB'; --Senior unsecured note due April 2021 upgraded to 'BB' from 'BB-'. The Rating Outlook is Stable. Contact: Primary Analyst Nelson Ma, CFA Director +1-212-908-0273 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Douglas L. Meyer, CFA Managing Director +1-312-368-2061 Committee Chairperson Douglas Pawlowski, CFA Senior Director +1-312-368-2054 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below