KBRA Assigns Rating to Soteria Reinsurance Ltd.

KBRA assigns an insurance financial strength rating (IFSR) of A to Soteria Reinsurance Ltd (“Soteria”). The Outlook for the rating is Stable.

Key Credit Considerations

The rating reflects Soteria’s strong capitalization, conservative balance sheet, embedded role within FMR LLC’s (“Fidelity Investments” or “Fidelity””) insurance ecosystem, and early stage but strengthening operating fundamentals. Soteria reported year-end 2024 GAAP equity of $84.8 million and a BSCR coverage ratio of 319%, well above regulatory requirements and internal targets. The company remains fully equity-funded and operates without financial leverage. The investment portfolio consists primarily of well- diversified, high quality fixed-income securities and funds-withheld assets, with solid liquidity. The company applies a liability-driven investment approach and maintains tight asset-liability alignment. Soteria’s governance, risk management, and operating infrastructure reflect a robust oversight and policy framework. The company’s role within Fidelity’s customer-centric model, including its reinsurance of predictable single premium deferred annuity (SPDA) flow from Fidelity Investment Life Insurance Company, provides a stable new business pipeline of affiliated reinsurance with strong visibility into product design, expected cash flows, and underlying policyholder behavior. Management has taken a measured approach to platform development, consistent with the company’s early stage of operations and supported by Fidelity’s provision of patient long-term capital.

Balancing these strengths are the company’s concentrated business mix, limited operating history, and dependence on affiliated reinsurance flows during its early development, although the company anticipates soliciting third-party business in the future. As a relatively new company, Soteria has yet to demonstrate sustained earnings performance through varying market environments, and continued execution on underwriting, investment, and governance disciplines will remain important as the platform scales.

Rating Sensitivities

Sustained earnings growth, internal capital generation, successful execution of unaffiliated reinsurance transactions which broaden the company’s counterparty base, demonstrated operating stability and performance, and continued expansion of assets and liabilities while maintaining strong risk-based capital ratios could result in positive rating momentum. Conversely, reduced integration, oversight or strategic commitment from Fidelity, BSCR coverage ratio declining below target or erosion of capital quality, prolonged spread compression, higher expenses, elevated surrenders or unfavorable results weakening earnings, delayed or limited progress in unaffiliated diversification or operational scalability, and control or governance weaknesses as the platform expands could result in a negative rating action.

Soteria is a Bermuda long-term reinsurer established in 2022 as a wholly owned subsidiary of Soteria Reinsurance Holdings LLC, which in turn is owned by Fidelity. Soteria was established to support Fidelity’s strategy to provide competitive savings and protection products to its customer base as they transition into retirement. Soteria assumes annuities offered by Fidelity Investment Life Insurance Company and sold through an extensive network of financial advisors operating through Fidelity Insurance Agency. Fidelity Investments is a privately held financial services firm founded in 1946 and based in Boston, Massachusetts, that serves over 45 million investors and manages approximately $15.1 trillion in assets as of year-end 2024. The company offers mutual funds, employee benefits, online brokerage, real estate investments, and an array of annuity products through its insurance operations.

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