OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of National Life Insurance Company (NLIC) (Montpelier, VT) and its wholly owned subsidiary, Life Insurance Company of the Southwest (Addison, TX) (together known as National Life). Both companies are life insurance subsidiaries of NLV Financial Corporation (NLVF) (Montpelier, VT), which is the intermediate holding company in the organization’s mutual holding company structure. NLVF and its subsidiaries are collectively known as the National Life Group.
A.M. Best also has affirmed the Long-Term ICR and the Long-Term Issue Credit Rating (Long-Term IR) of “bbb+” of NLVF. Additionally, A.M. Best has affirmed the Long-Term IR of “a-” on $200 million 10.50% surplus notes, due 2039 of NLIC. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the Long-Term IRs.)
The ratings reflect the National Life Group’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management. The group has a long history of solid execution in targeting life insurance and annuity product solutions to the middle market segment, which it markets through a combination of career agents and a growing independent agency force. The group has shown strong sales growth in recent years, outperforming the broader life insurance market. Profitable growth has led to an increased market position, and increasing market share with its niche products, such as its offerings in the K-12 educators market. The ratings also reflect the current asset portfolio composition, which includes a higher risk profile that the company is addressing through a longer-term plan to migrate the invested asset portfolio to a more favorable risk-reward position.
Despite the group’s ongoing efforts to shift to a more balanced book of business, which is less interest sensitive dependent, the group remains concentrated in equity indexed-linked products in the life insurance and annuity segments. Additionally, sales are increasingly reliant on guaranteed income benefits, which add additional longer risks to the liability profile. In addition to the inherent risks of these products, a portion of the company's non-core fixed annuities have been impacted by the U.S. Department of Labor’s fiduciary rule. The company's core non-qualified insurance and flow annuity products are not impacted. Lastly, while the group has a track record of increasing risk-adjusted capitalization, the use of captives and surplus notes reduces the overall quality of capital.
The following Long-Term IRs have been affirmed:
NLV Financial Corporation—
- “bbb+” on $75 million 6.50% senior unsecured notes, due 2035
- “bbb+” on $200 million 7.50% senior unsecured notes, due 2033
National Life Insurance Company—
- “a-” on $200 million 10.50% surplus notes, due 2039
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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