OLDWICK, NJ–(BUSINESS WIRE)–AM Best Affirmed National Life Insurance Company (NLIC) Financial Strength Rating (FSR) of A+ (Superior) and Issuer Long Term Credit Rating (Long ICR) of “aa-” (Superior) ( Montpelier, VT) and its wholly owned subsidiary, Life Insurance Company of the Southwest (Addison, TX). Concurrently, AM Best affirmed the long-term issue credit ratings (long-term IR) of “a” (Excellent) on NLIC’s excess notes. Both companies are life insurance subsidiaries of NLV Financial Corporation (NLVF) (headquarters in Montpellier, VT), which is the intermediate holding company in the organization’s mutual holding company structure, and are collectively known as the name of National Life Group (NL Group). AM Best also confirmed NLVF’s long-term ICR and long-term IRs of “a-” (Excellent). The outlook for these Credit Ratings (ratings) is stable. (See below for a detailed list of long-term IRs.)
The ratings reflect the strength of NL Group’s balance sheet, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate management of business risks.
The ratings also reflect continued favorable trends in NL Group’s balance sheet strength measures, supported by its risk-adjusted capitalization, which is at the highest level and is expected to remain at this level, as measured by the adequacy ratio. stake in Best (BCAR). In addition, the continuous strategic initiatives implemented by the management have contributed to improving the assessment of the operational performance of NL Group in the medium term. Life insurance/annuity sales continued to grow strongly in 2021, as did the results of NL Group’s alternative assets. Although NL Group has improved the risk profile of its investment portfolio through recent risk reduction initiatives, the portfolio remains less conservative than some of its peers. Despite a difficult credit market and in the context of the pandemic, overall default losses and credit migrations remained very limited in 2021, with actual results remaining well below stressed scenarios.
In addition, NL Group’s NAIC risk-based capital ratio trend has remained strong and well above company targets and regulatory requirements over the past several years. NL Group also performed risk-based capital stress test scenarios following the COVID-19 pandemic, which showed that risk-based capital levels remained above its defined risk thresholds. There was moderate volatility in net profit levels, driven by non-core earnings that reflect changes in GAAP accounting provision for index-linked products, as well as short-term movements in equity markets and yield curves. ‘interest.
NL Group has a long and successful history of targeting life insurance and annuity product solutions to the middle market segment through its growing agency force of career and independent agents. NL Group’s strong sales growth trend continued through the end of 2021, but sales may be challenged to grow at a similar pace in the near future due to the continued effects of the pandemic, as well as the low interest rate environment and its impact on the competitive landscape of the insurance industry. Higher than expected mortality in NL Group’s life insurance business continued. However, recent profitable growth has improved its market position and increased market share through its niche products, such as its offerings in the K-12 educator and preschool markets. indexed universal life insurance. The assessment of ERM as appropriate reflects NL Group’s well-established governance structure, culture and risk management controls, which continue to evolve and become more sophisticated.
The following long-term IRs have been confirmed with a stable outlook:
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% Excess Notes, Due 2039
— “a” (Excellent) on $500 million 5.25% Excess Notes, Due 2068
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