AM Best Affirms Credit Ratings of National Western Life Group, Inc. and Its Subsidiaries
August 20 2020 - 4:39PM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
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 (ERM). The ratings also reflect NWLIC’s strongest
level of risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), as well as its consistent GAAP
operating earnings, although derivative accounting has resulted in
some earnings volatility on a statutory accounting 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. As a result, NWLIC’s
operating results may be impacted negatively by continued low
interest rates. 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 ERM.
Ozark’s existing business model, which is focused primarily on
selling simplified ordinary life products to the middle market
through its captive agent channel, has faced challenges during
COVID-19. Ozark’s historically stable earnings pattern has
continued since its acquisition by NWLIC. AM Best will continue to
monitor Ozark’s strategic value to NWLIC and the opportunities it
presents, along with the execution of its ongoing integration.
This press release relates to Credit Ratings that have been
published on AM 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Louis Silvers Senior Financial Analyst +1 908
439 2200, ext. 5802 louis.silvers@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Thomas Rosendale Senior Director +1 908 439
2200, ext. 5201 thomas.rosendale@ambest.com
Jim Peavy Director, Public Relations +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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