OLDWICK, N.J.--()--A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit rating to “a-” from “bbb+“ of Ozark National Life Insurance Company (Ozark National) (Kansas City, MO). The outlook for both ratings is stable.
“bbb+“ of Ozark National Life Insurance Company (Ozark National) (Kansas City, MO). The outlook for both ratings is stable.”
The rating upgrades reflect Ozark National’s favorable capitalization, consistent earnings and strong liquidity profile, underpinned by a high quality investment portfolio and an agency force, which has recently begun to grow. Offsetting rating factors include the company’s concentrated operational focus, modestly declining premium trends and its history of distributing the lion’s share of its earnings to its parent in the form of dividends.
Ozark National’s financial fundamentals remain strong. The company’s balance sheet strength is supported by robust statutory earnings trends driven by its stable core whole life business, complemented by consistent investment results and a modest level of financial leverage. Ozark National’s marketing program is focused on the sale of non-participating whole life insurance along with a mutual fund investment to accomplish policyholders’ insurance and investment objectives.
Offsetting rating factors include Ozark National’s challenge to increase premium production in the current economic environment. However, Ozark National’s emphasis on agent hiring and licensing has resulted in a significant increase in its agent count during 2012. A.M. Best expects that the increasing agent count may positively impact the company’s new sales over the near term, and as a result, begin to grow first year life premiums. Although A.M. Best recognizes Ozark National’s mono-line business profile and narrow geographic focus, its core whole life insurance business is considered to be one of the most creditworthy product lines. The significant and continuing dividends to its parent limit the funds available to support its efforts to bolster life insurance sales.
Ozark National’s ratings are considered well positioned at their current level. Factors that could result in negative rating actions include a significant and sustained decline in the company’s risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR) model and/or an operating performance that does not meet A.M. Best’s expectations over a sustained period.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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