AM Best Revises Outlooks to Negative for Kansas City Life Insurance Company; Downgrades Credit Ratings of Grange Life Insurance Company; Revises Issuer Credit Rating Outlook to Negative for Old American Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Kansas City Life Insurance Company (Kansas City Life) [OTCQX: KCLI]. At the same time, AM Best downgraded the FSR to B+ (Good) from B++ (Good) and the Long-Term ICR to “bbb-” (Good) from “bbb” (Good) of Grange Life Insurance Company (Grange Life) (Columbus, OH). The outlook of these Credit Ratings (ratings) is negative. Concurrently, AM Best has revised the outlook to negative from stable for the Long-Term ICR and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Old American Insurance Company (Old American). The outlook of the FSR is stable. Kansas City Life and Old American are domiciled in Kansas City, MO. Grange Life and Old American are wholly owned subsidiaries of Kansas City Life.

The negative outlooks on the ratings of Kansas City Life and Grange Life, as well as the negative outlook on the Long-Term ICR of Old American, reflect the group's pending litigation exposures associated with universal life cost-of-insurance policyowner charges, and whether Kansas City Life's risk mitigation strategies will alleviate the remaining pressure on its capital growth plan and improve its risk-adjusted capitalization.

The ratings of Kansas City Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM). The group reported about $4 billion of admitted assets at the end of third-quarter 2025, highlighting its diverse product mix that includes individual and group life insurance, individual annuities and separate account variable annuity business, which provide operating scale and diversification benefits. The organization faces strong competition from larger peers. For example, high upfront commissions and incremental innovation and technology costs may be needed to support Old American’s premium volumes in the final expense market.

AM Best also will continue to monitor how legal costs impact the group’s overall balance sheet strength and ERM assessments. While a settlement agreement has been reached, which AM Best views favorably, additional accrued expenses in 2025 contributed to statutory operating losses and final court hearings to approve the settlement still needs to take place. The significant decline in statutory net income in the first nine months of 2025, was mostly offset by capital relief from a third-party structured reinsurance transaction executed by Old American with a well-rated counterparty, which AM Best also views favorably. The group’s strategic use of reinsurance with long-standing reinsurer partners transfers risk and reduces the impact of strain on capital levels; however, this is partially offset by higher reinsurance dependence that limits the group’s overall financial flexibility in the near term.

The ratings of Grange Life reflect its balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and appropriate ERM.

The downgrading of the ratings of Grange Life reflect its decline in risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), and AM Best’s expectation that its weak level of risk-adjusted capital and modest amount of available capital will not return to historical levels. Grange Life continues to operate as a closed block of business, since the start of 2020, when all policies sold through Grange Life’s former agents began being written by Kansas City Life. Grange Life is licensed in just 15 states.

The ratings of Old American reflect its balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate ERM. The ratings of Grange Life and Old American also reflect implicit support from the greater organization.

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