OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of National Western Life Insurance Company (NWLIC) (Centennial, CO). Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Ozark National Life Insurance Company (Ozark) (Kansas City, MO). In addition, AM Best has affirmed the Long-Term ICR of “bbb” of National Western Life Group, Inc. (headquartered in Austin, TX) [NASDAQ:NWLI], the parent holding company of NWLIC and Ozark. The outlook of these Credit Ratings (ratings) is stable.
The ratings of NWLIC reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect NWLIC’s relatively diversified business profile through its domestic life, annuity and run-off international life operating segments. NWLIC has demonstrated consistent operating earnings, although derivative accounting has resulted in some volatility on a statutory basis.
These strengths are offset by NWLIC’s high concentration of reserves in interest-sensitive products, elevating the risk of duration mismatches and spread compression. For NWLIC’s large fixed-indexed annuity book, there is potential volatility in the cost and efficiency of its hedging program. In addition, the company has reported a declining trend in net premiums written in recent years, resulting from the reduction in annuity production, and ceasing the acceptance of new life insurance business from its international markets.
The ratings of Ozark reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Since NWLIC’s purchase of Ozark, there have been no material changes to Ozark’s existing business model, which is focused primarily on selling simplified ordinary life products to the middle market through its captive agent channel. Ozark’s historically stable earnings pattern is expected to continue, albeit at a somewhat lower level, due to the impact of the recent dividend on its asset base.
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