Vermont Business MagazineAMBest Companyhas affirmed itsA (Excellent)financial strength ratings for National Life Insurance Company and Life Insurance Company of the Southwest, the two insurance companies ofNational Life Group, based in Montpelier. This is the third highest of AMBest’s 16 ratings.“Our mission is to deliver on our promises,” said Mehran Assadi, president and CEO of National Life Group. “I am very pleased that AMBest has reaffirmed our excellent rating, which reflects our financial strength.”
In anews release(see below) announcing the ratings, AMBest cited a number of factors, including National Life Group's competitive strength in the marketplace.
“National Life Group’s ratings recognize its consistent operating performance, conservative risk profile and favorable sales growth complemented by diverse distribution sources,” A.M. Best said. “Moreover, the company benefits from its competitive position in the indexed universal life (IUL) insurance and 403(b) indexed annuity markets.”
The companies of National Life Group offer a broad range of financial products, including life insurance, annuities, and investments, and financial solutions in the form of estate, business succession and retirement planning strategies. They are a leading provider of 403(b) and 457(b) tax-deferred retirement plans, primarily in the K-12 school marketplace.
A.M. Best Affirms Ratings of NLV Financial Corporation and Its Affiliates
OLDWICK - JANUARY 13, 2016
A.M. Besthas affirmed the financial strength rating of A (Excellent) and the issuer credit ratings (ICR) of “a+” ofNational Life Insurance Company(NLIC) (Montpelier, VT) and its wholly owned subsidiary,Life Insurance Company of the Southwest(Dallas, TX) (together known as National Life). Both companies are life insurance subsidiaries ofNLV Financial Corporation(NLVF) (Montpelier, VT), which is the intermediate holding company in the organization’s mutual holding company structure. NLVF and its subsidiaries are collectively known as the National Life Group.
Concurrently, A.M. Best has affirmed the ICR and senior issue ratings of “bbb+” of NLVF. A.M. Best also has affirmed the issue rating of “a-” on $200 million 10.50% surplus notes due 2039 of NLIC. The outlook for all ratings is stable. (See below for a detailed listing of the issue ratings.)
National Life Group’s ratings recognize its consistent operating performance, conservative risk profile and favorable sales growth complemented by diverse distribution sources. Moreover, the company benefits from its competitive position in the indexed universal life (IUL) insurance and 403(b) indexed annuity markets. The rating affirmations also reflect National Life Group’s strong risk-adjusted capitalization, which was enhanced by an earlier surplus note issuance and continued profitable operations. Additionally, National Life Group continues to grow its capital base with 2014 total adjusted capital at approximately $1.7 billion, which is 9.3% above its 2013 level. Total adjusted capital has reached $1.8 billion as of Sept. 30, 2015.
National Life Group’s investment portfolio was in a net unrealized gain position of approximately $1.2 billion at the end of 2014. The investment portfolio is conservatively managed with limited exposure to structured securities, including commercial mortgage-backed securities, and is well-matched to its liabilities. Approximately 96% of residential mortgaged-backed securities held by National Life Group are highly rated, agency backed and without any exposure to Alt-A or subprime collateral. In addition, National Life Group exercises discipline in product design while maintaining competitive positions within its mainstream products (indexed UL and indexed annuities).
The insurance operations are consistently profitable. In addition, overall GAAP earnings benefit from diversification afforded by its mutual fund operations—Sentinel Investments—which has shown a positive operating earnings for the past three years. Total assets under management increased slightly to approximately $31.4 billion for 2014, compared with $30.0 billion for 2013.
Offsetting these positive rating factors is National Life Group’s dependence on interest-sensitive products through strong sales of indexed annuities and higher NAIC Class 2 bonds than industry average, which in an economic downturn are likely to be impacted more than higher rated bonds.
In 2014, there was capital and surplus growth and a pay-off of $20.6 million in trust preferred securities that resulted in an improved GAAP financial leverage of 18.5%. As of June 30, 2015, financial leverage continues to improve at 17.5%. These ratios remain within A.M. Best’s guidelines for the company’s current ratings. At the same time, National Life Group’s GAAP interest coverage at more than five times has improved in 2014. A.M. Best notes that the organization’s debt service capabilities are supported by a strong cash and invested asset position, along with favorable service capabilities at its primary insurance subsidiaries.
The following issue ratings have been affirmed:
NLV Financial Corporation—
— “bbb+” on $75 million 6.50% senior unsecured notes, due 2035
— “bbb+” on $200 million 7.50% senior unsecured notes, due 2033
National Life Insurance Company—
— “a-” on $200 million 10.50% surplus notes, due 2039
This press release relates to rating(s) that have been published on A.M. Best’s website. For all ratin 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 visit A.M. Best’sRatings & Criteria Center.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions.
A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services.
A.M. Best - Europe Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institution (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.
Source:National Life Group1.15.2016