A.M. Best Affirms Ratings of National Western Life; Revises Outlook

  
    
  
  
    
      A.M. Best Co. has affirmed the financial strength rating (FSR) of 
      A- (Excellent) and issuer credit rating (ICR) of “a-” 
      of National Western Life Insurance Company (NWL) (Denver, CO) [NASDAQ: 
      NWLIA]. The outlook for both ratings has been 
      revised to positive from stable.
    
    
      The rating actions reflect NWL’s diverse 
      business profile marketing both to the U.S. and international markets, 
      its solid operating results, superior risk-adjusted capitalization and 
      increasing statutory capital and surplus and GAAP equity trends. 
      Offsetting these strengths are the challenges to manage its increasing 
      exposure to interest-sensitive annuity and universal life liabilities 
      and continuing to grow its domestic ordinary life businesses.
    
    
      In revising the outlook, A.M. Best acknowledges NWL’s 
      competitive position in its international markets that continues to 
      provide diversification of revenue, insurance risk and profitable 
      operating results. In addition, the revised outlook reflects management’s 
      concentrated efforts to grow its U.S. domestic ordinary life segment 
      that A.M. Best believes will further diversify NWL’s 
      business profile, as well as its initiatives to further enhance and 
      refine its asset/liability and enterprise risk management processes.
    
    
      NWL’s net premium growth in recent years has 
      been primarily driven by its equity-indexed annuity (EIA) segment. While 
      NWL’s annuity growth has resulted in 
      significant interest rate risks, the company’s 
      strong risk-adjusted capitalization, surrender charge protection and 
      market value adjustment features partially mitigate these risks. In 
      noting NWL’s growth in EIAs, A.M. Best 
      acknowledges its prudent product design and customer profiles, effective 
      hedging programs and active market conduct and compliance programs. 
      However, A.M. Best remains cautious over the potential declines in the 
      industry’s future EIA sales and its impact on 
      earnings given the increasing due diligence demanded to comply with the 
      prevailing heightened regulatory environment.
    
    
      For Best’s Ratings, an overview of the rating 
      process and rating methodologies, please visit www.ambest.com/ratings.
    
    
      Founded in 1899, A.M. Best Company is a full-service credit rating 
      organization dedicated to serving the financial services industries, 
      including the banking and insurance sectors. For more information, visit www.ambest.com.