A.M. Best Co. has affirmed the financial strength rating (FSR) of B++ (Good) and issuer credit ratings (ICR) of “bbb+” of the key life/health subsidiaries of Fidelity & Guaranty Life Holdings, Inc. (FGL) (Delaware). Concurrently, A.M. Best has affirmed the ICR and existing senior debt rating of “bb+” of FGL. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.) The ratings acknowledge FGL’s improved risk-adjusted capitalization and financial flexibility, consistent statutory and U.S. GAAP earnings performance, conservative investment portfolio and the substantial progress that has been made to improve FGL’s risk profile. The ratings also reflect the relatively weak credit profile of FGL’s parent, Harbinger Group Inc. (HGI) (NYSE:HRG). FGL, through its insurance subsidiaries, is a manufacturer of individual life and annuity products and maintains a competitive position in fixed indexed annuities as well as a modest position in indexed universal life insurance. In response to the low interest rate environment, FGL has been proactive with new product development initiatives, particularly within the fixed indexed annuity segment. Consistently positive statutory net income, reduced asset impairments and the de-risking of its investment portfolio have contributed to FGL’s improved risk-adjusted capitalization. Furthermore, FGL’s financial flexibility has been enhanced by the conversion of an intercompany note to equity and a successful inaugural senior unsecured notes offering in March 2013. In addition, FGL has announced a planned partial initial public offering, which will provide incremental capital to support business growth. Partially offsetting these positive rating factors are the challenges of the persistently low interest rate environment, significant reliance on fixed indexed annuity sales growth and the weak, albeit somewhat improved, credit profile of HGI. While acknowledging the recent improvement, A.M. Best notes that HGI’s business model employs significant financial leverage to meet its business objectives and relies on dividend payments from FGL to help service its debt. Given its level of indebtedness, A.M. Best believes that HGI’s ability to provide capital to FGL during periods of financial stress may be limited. Moreover, A.M. Best expects FGL’s organic capital growth to be moderate for the foreseeable future as its statutory earnings will likely be partially offset by dividend payments to HGI.