National Western Life Insurance Company (MM) (NASDAQ:NWLIA)
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From Jul 2019 to Jul 2024
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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.