The announcement by Bermudian-based Fidelis Insurance Holdings Limited that it is to create a managing general underwriter has impacted the ratings of the company and its subsidiaries with AM Best.

The ratings agency has placed under review with negative implications the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a” (Excellent) of Fidelis Insurance Bermuda Limited (Fidelis), Fidelis Underwriting Limited (United Kingdom) and Fidelis Insurance Ireland Designated Activity Company (Ireland).

In addition, AM Best has placed under review with negative implications the long-term ICR of “bbb” (Good) of Fidelis Insurance Holdings Limited, the ultimate holding company.

Concurrently, the agency has placed under review with negative implications the long-term issue credit rating of “bb+” (Fair) of Fidelis Insurance Holdings Limited’s $304 million ($58 million currently outstanding) nine per cent preference shares due 2050.

Fidelis announced last week its intention to create Fidelis MGU, a new managing general underwriter, which upon regulatory approval will be separated from the existing Fidelis companies.

The new entity will be led by most of the current management of Fidelis. In turn, Fidelis will be led by a combination of existing Fidelis executives supplemented by a number of experienced senior executives from outside the organisation.

As a result of the risk of implementation of the new structure, AM Best is of the opinion that Fidelis’ business profile may be affected by the separation of key management personnel into a separate legal entity.

As a result the ratings of Fidelis Insurance Holdings Limited and the members of this rating unit have been placed under review with negative implications.

AM Best said it will continue to monitor the separation, implementation and execution of the new strategy and structure.

The under review status is expected to be resolved when the separation is fully executed, which includes appropriate regulatory approvals, and AM Best can assess, among other items, the market acceptance of the new structure, which will be apparent by analysing business volumes and quality.