A.M. Best Affirms Ratings of National Western Life Insurance Company
June 11 2015 - 12:19PM
Business Wire
A.M. Best has affirmed the financial strength rating of A
(Excellent) and the issuer credit rating of “a” of National
Western Life Insurance Company (NWL) (Denver, CO)
[NASDAQ:NWLI]. The outlook for both ratings is stable.
The affirmation of the ratings reflects NWL's consistently
favorable operating results, which have led to increases in
statutory capital, consolidated stockholders' equity and
risk-adjusted capitalization. NWL maintains a relatively diverse
business profile, offering primarily equity-indexed annuities
within the United States and equity-indexed universal life
domestically and to residents of international countries.
International sales are generated from applications submitted by
residents of Central and South America, the Caribbean, Eastern
Europe, Asia and the Pacific Rim. A.M. Best notes that NWL
mitigates the added risk of international exposure by accepting
applications to its Texas office from foreign nationals in upper
socioeconomic classes and by denominating policies in the U.S.
dollar. Furthermore, A.M. Best views the company’s risk management
procedures favorably, proactively mitigating and hedging its
primary risk exposures, including changes to interest rates and
duration mismatches, equity market volatility, currency
fluctuations and sovereign risks.
Partially offsetting these positive rating factors is NWL's
large exposure to interest sensitive liabilities, due to growth in
annuities and equity-indexed life products. NWL mitigates the risk
of spread compression through a well-matched fixed income portfolio
and active management of crediting rates. However, a continued low
interest rate environment could negatively impact the company's
operating results. Furthermore, the domestic life market has been
challenged to maintain sales growth and has recorded large
statutory losses and just modest GAAP earnings, partially
offsetting the profitability provided by other lines of business.
A.M. Best notes that the company could be challenged to sustain its
historical operating performance due to competition from larger
companies with substantial financial resources and marketing depth,
as well as increased expense strains associated with premium
growth.
A.M. Best believes positive rating actions are unlikely in the
near term to medium term. NWL's ratings may face downward pressure
following increased concentration of revenue or earnings in
individual product segments, unfavorable consolidated operating
trends, or material declines in risk-adjusted capitalization.
The methodology used in determining these ratings is Best’s
Credit Rating Methodology, which provides a comprehensive
explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Best’s
Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- A.M. Best's Liquidity Model for U.S.
Life Insurers
- Evaluating Country Risk
- Risk Management and the Rating Process
for Insurance Companies
- Understanding BCAR for U.S. and
Canadian Life/Health Insurers
This press release relates to rating(s) 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 visit A.M.
Best’s Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20150611006011/en/
A.M. BestKeith BehrmannFinancial
Analyst908-439-2200, ext.
5733keith.behrmann@ambest.comorThomas
RosendaleAssistant Vice President908-439-2200, ext.
5201thomas.rosendale@ambest.comorChristopher
SharkeyManager, Public Relations908-439-2200, ext.
5159christopher.sharkey@ambest.comorJim
PeavyAssistant Vice President, Public
Relations908-439-2200, ext.
5644james.peavy@ambest.com
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