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AM Best Revises Outlooks to Negative for Fidelity Life Association, A Legal Reserve Life Insurance Company

August 26, 2021 GMT

OLDWICK, N.J.--(BUSINESS WIRE)--Aug 26, 2021--

AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Fidelity Life Association, A Legal Reserve Life Insurance Company (FLA) (Chicago, IL). FLA is a wholly owned subsidiary of Vericity, Inc. (Vericity).

These Credit Ratings (ratings) reflect FLA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

FLA has continued to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). A decline in the company’s total capital and surplus has been driven by growth in new business in the past few years. Reinsurance leverage remains high compared with industry trends, as the company has pivoted to a greater use of reinsurance instead of reserve financing as part of its capital structure. The negative outlooks reflect AM Best’s declining view of the company’s adequate operating performance results, which continue to be moderately volatile, and are expected to remain challenged in the near term with substantial new business growth, changes in commission structure and increased policyholder benefits. While the company’s overall return-on-equity ratio has overall improved from prior years, it still lags behind the industry average.


Although direct premiums written have remained fairly strong, a majority of the net premiums written have been associated with ordinary life products and tend to have higher lapses than the industry average. The company’s strategic alliance with affinity partners has helped client growth, creating an opportunity for value-added capital deployment. As with most life insurers, FLA remains challenged by the persistent low interest rate environment, especially related to its interest-sensitive liabilities, which comprise a little over a quarter of its total liabilities, with a majority having no surrender charges and higher guarantees. AM Best will continue to closely monitor FLA’s strategic objectives and performance in the near future.


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 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

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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CONTACT: Igor Bass

Senior Financial Analyst

+1 908 439 2200, ext. 5109

igor.bass@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comAnthony McSwieney

Senior Financial Analyst

+1 908 439 2200, ext. 5715

anthony.mcswieney@ambest.comJim Peavy

Director, Communications

+1 908 439 2200, ext. 5644




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PUB: 08/26/2021 02:29 PM/DISC: 08/26/2021 02:29 PM