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TMCNet:  A.M. Best Affirms Credit Ratings of National Western Life Insurance Company

[July 13, 2017]

A.M. Best Affirms Credit Ratings of National Western Life Insurance Company

A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "a" of National Western Life Insurance Company (NWLIC) (Denver, CO). Concurrently, A.M. 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. The outlook of these Credit Ratings (ratings) is stable.

The rating affirmations reflect NWLIC's relatively diversified business profile through its domestic life, international life and annuity operating segments. Furthermore, the company consistently has reported positive operating earnings, although derivative accounting has resulted in some volatility on a statutory basis. A.M. Best views NWLIC's risk-adjusted capitalization as strong for its liability profile, supported by a lower risk investment portfolio and enhanced by robust asset-liability matching and hedging programs. Additionally, A.M. Best notes that the formation of the holding company structure adds financial flexibility and reduces the capital requirement of the non-insurance affiliates. A.M. Best also notes that currently there is no debt outstanding at either the operating company or the holding company, and no debt issuances are anticipated over the near term.

Partially offsetting these positive rating factors is NWLIC's concentration of reserves in interest-sensitive products, elevating the risk of duration mismatches and spread compression in the low interest rate environment.

The compny has reported a declining trend in net premiums written in recent years, resulting from the strategic reduction in annuity production, ceasing the acceptance of business from several of its larger international markets and the impact of the Department of Labor's regulatory update impacting NWLIC's indexed annuity block. Additionally, by reducing the number of international markets from which it accepts business, the diversification benefit provided by this segment is somewhat diminished.

This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.


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