A.M. Best Assigns Issuer Credit Rating to National Western Life Group, Inc.; Affirms Ratings of National Western Life Insuran...
June 29 2016 - 10:21AM
Business Wire
A.M. Best has assigned an issuer credit rating (ICR) of
“bbb” to National Western Life Group, Inc. (NWLG)
(headquartered in Austin, TX) (NASDAQ:NWLI). The outlook assigned
to the rating is stable. Concurrently, A.M. Best has affirmed the
financial strength rating of A (Excellent) and the ICR of “a” of
National Western Life Insurance Company (NWLIC) (Denver,
CO). The outlook for each of these ratings is stable. NWLG is the
recently formed parent holding company of NWLIC.
The rating assignment for NWLG reflects the holding company’s
recent formation as the publicly traded parent of NWLIC. NWLG has
modest operations outside of its primary insurance subsidiary and
has no outstanding financial leverage.
The rating affirmations reflect NWLIC’s favorable operating
performance, which has supported growth in statutory capital,
consolidated stockholders’ equity and risk-adjusted capitalization.
NWLIC benefits from international diversification by offering
primarily equity indexed life and annuity products within the
United States and to residents of international countries.
International sales are generated from applications submitted by
residents of South America, the Caribbean, Eastern Europe and Asia.
A.M. Best notes that NWLIC mitigates the additional risk of
international exposure by accepting applications to its Texas
office from foreign nationals in upper socioeconomic classes and by
denominating policies in the U.S. dollar. Furthermore, A.M. Best
views the company’s risk management procedures favorably,
proactively mitigating and hedging its primary risk exposures,
including changes to interest rates and duration mismatches, equity
market volatility, currency fluctuations and sovereign risks.
Partially offsetting these positive rating factors is NWLIC’s
large exposure to interest-sensitive liabilities, due to growth in
annuities and equity-indexed life products. Additionally, the
inclusion of indexed annuities in the Department of Labor’s
recently announced regulatory changes could have a material impact
on NWLIC’s annuity sales when implemented. The company’s domestic
life market has been challenged to maintain sales growth and has
recorded large statutory losses and only modest GAAP earnings,
which partially offset the profitability provided by other lines of
business. Additionally, NWLIC has made the strategic decision to
stop accepting applications from certain international markets,
which is expected to cause a reduction in the segment’s new
business premium in the near term.
A positive rating action could occur following material
expansion of the business profile into more creditworthy product
lines that reduce the concentration of the business profile in
interest sensitive products. Factors that could result in a
negative rating action include an increased concentration of
revenue or earnings in single product segments, an unfavorable
trend in consolidated operating performance, and a material decline
in equity or risk-adjusted capitalization as a result of operating
losses or investment impairments.
This press release relates to rating(s) 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.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20160629005870/en/
A.M. BestKeith Behrmann, +1-908-439-2200, ext.
5733Financial
Analystkeith.behrmann@ambest.comorThomas Rosendale,
+1-908-439-2200, ext. 5201Assistant Vice
Presidentthomas.rosendale@ambest.comorChristopher Sharkey,
+1-908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1-908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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