AM Best Affirms Credit Ratings of NLV Financial Corporation and Its Insurance Subsidiaries
21 June 2024 - 12:58AM
Business Wire
AM Best has affirmed the Financial Strength Rating of A+
(Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR)
of “aa-” (Superior) of National Life Insurance Company (NLIC)
(Montpelier, VT) and its wholly owned subsidiary, Life Insurance
Company of the Southwest (LSW) (Addison, TX). Concurrently, AM Best
has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of
“a” (Excellent) of the surplus notes of NLIC. Both companies are
collectively known as National Life Group (NL Group) and are life
insurance subsidiaries of NLV Financial Corporation (NLVF)
(headquartered in Montpelier, VT), which is the intermediate
holding company in the organization’s mutual holding company
structure. AM Best also has affirmed the Long-Term ICR and the
Long-Term IRs of “a-” (Excellent) of NLVF. The outlook of these
Credit Ratings (ratings) is stable. (See below for a detailed
listing of the Long-Term IRs).
The ratings reflect NL Group’s balance sheet strength, which AM
Best assesses as very strong, as well as its strong operating
performance, favorable business profile and appropriate enterprise
risk management (ERM).
These ratings also indicate continued favorable trends in NL
Group’s balance sheet strength metrics, supported by its strongest
level of risk-adjusted capitalization, which is projected to remain
at that level, as measured by Best’s Capital Adequacy Ratio (BCAR).
Continued strategic management initiatives have resulted in further
growth of the group’s life/annuity sales, but sales for the
industry could still be challenged to grow at a similar pace in the
near future with economic uncertainty and its potential impact on
the insurance industry’s competitive landscape. NL Group’s
structured investments comprised the biggest relative investment
allocation increase for the year, while commercial real estate had
the largest investment allocation decline, as new fundings within
the asset class have been limited.
NL Group’s NAIC risk-based capital ratio improvement has
remained strong and well above regulatory requirements over the
past several years. However, there has been moderate continued
volatility in NL Group’s net income levels, driven by non-core
earnings that reflect GAAP accounting reserving changes for indexed
products, as well as short-term movement in equity markets and
interest-rate curves.
NL Group has a long history of successfully targeting life
insurance and annuity product solutions to the middle market
segment through its growing agency force consisting of career and
independent agents. Recent profitable growth has led to a further
improved market position and increasing market share through its
niche products, such as its offerings in the K-12 educator and
indexed universal life markets. The ERM assessment of appropriate
continues to reflect NL Group’s well-established governance
structure, culture and risk management controls, which are
continuing to evolve and grow more sophisticated.
More recently, NL Group has embarked on an offshore Bermuda
reinsurance partnership with 26North Reinsurance Holdings, which
provided the majority of the capital and has a majority ownership
in the newly formed Bermuda reinsurer AeCe ISA, Ltd. (AeCe), with
NLIC and Agam Capital (Agam) each having a minority stake. Agam
provides administration and other services. LSW, a subsidiary of
NLIC, has reinsured $4.9 billion of reserves at closing as part of
this transaction, and will reinsure a quota share of new
fixed-indexed annuity & multi-year guaranteed annuity business
in 2024. The transaction is structured as coinsurance with funds
withheld by LSW. AM Best will closely monitor the effects of this
transaction on the whole organization as it continues to evolve in
the near future.
The following Long-Term IRs have been affirmed with stable
outlooks:
NLV Financial Corporation— — “a-” (Excellent) on $75 million
6.50% senior unsecured notes, due 2035 — “a-” (Excellent) on $200
million 7.50% senior unsecured notes, due 2033
National Life Insurance Company— — “a” (Excellent) on $200
million 10.50% surplus notes, due 2039 — “a” (Excellent) on $500
million 5.25% surplus notes, due 2068
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 use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
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 London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Igor Bass Senior Financial Analyst +1 908 882
1646 igor.bass@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Edward Kohlberg Director +1 908 882 1979
edward.kohlberg@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com