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OLDWICK, NJ – (BUSINESS WIRE) – AM Best has confirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) from the National Western Life Insurance Company (NWLIC) ( Centenary, CO). At the same time, AM Best has confirmed the FSR of A- (Excellent) and the long-term ICR of “a-” (Excellent) from the Ozark National Life Insurance Company (Ozark) (Kansas City, MO). In addition, AM Best has confirmed the long-term ICR of “bbb” (good) from the National Western Life Group, Inc. (headquartered in Austin, TX). [NASDAQ:NWLI], the parent company of NWLIC and Ozark. The outlook for these credit ratings is stable.
NWLIC’s ratings reflect its balance sheet strength, which AM Best believes to be the strongest, as well as its reasonable operational performance, neutral business profile and adequate enterprise risk management (ERM).
The ratings also reflect NWLIC’s strongest risk-adjusted capitalization, as measured by Best’s BCAR, as well as consistent GAAP operating results, although accounting for derivatives based on statutory accounting has resulted in some earnings volatility.
These strengths are offset by the high concentration of NWLIC’s reserves in interest rate sensitive products, which increases the risk of duration mismatches and spread compression. NWLIC has taken steps to mitigate this risk by transferring approximately $ 1.7 billion in co-insurance with retained funds to Prosperity Life Assurance Ltd. in December 2020. has ceded. Although premiums have increased over the past year, the company has seen a downward trend in net written premiums in recent years, driven by a reduction in pension production and a change in strategy a few years ago that resulted in NWLIC becoming the new life insurance business in international markets hired. Despite this move, international markets still make up a significant portion of the group’s premiums, although they will expire over time. NWLIC intends to focus on the US annuity and life insurance markets.
Ozark’s ratings reflect its balance sheet strength, which AM Best believes to be the strongest, as well as its reasonable operational performance, limited business profile and adequate ERM.
Ozark’s existing business model, which primarily focuses on selling simplified ordinary life insurance products to the middle class through its captive agent channel, has faced challenges during COVID-19. Ozark’s historically stable earnings pattern has continued since it was acquired by NWLIC. AM Best will continue to oversee the implementation of Ozark’s integration into NWLIC, particularly with regard to the integration of its risk management framework into NWLIC.
The holding company’s rating for NWLIC is viewed as neutral with no financial or operational leverage.
This press release relates to credit ratings published on the AM Best website. All rating information relating to the press release and relevant disclosures, including details of the individual rating entity referred to in this press release, can be found on the AM Best website for recent rating activity. For more information on the use and limitations of credit ratings, see Best’s Credit Ratings Guide. For information on how to properly use Best’s Credit Ratings, Best’s Preliminary Credit Ratings, and AM Best press releases, see the Best’s Ratings and Ratings Proper Use Guide.
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