AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of National Western Life Insurance Company (NWLIC) (Centennial, CO). Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Ozark National Life Insurance Company (Ozark) (Kansas City, MO). In addition, AM 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 and Ozark. The outlook of these Credit Ratings (ratings) is stable.

The ratings of NWLIC reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect NWLIC’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its consistent GAAP operating earnings, although derivative accounting has resulted in some earnings volatility on a statutory accounting basis.

These strengths are offset by NWLIC’s high concentration of reserves in interest-sensitive products, elevating the risk of duration mismatches and spread compression. As a result, NWLIC’s operating results may be impacted negatively by continued low interest rates. For NWLIC’s large fixed-indexed annuity book, there is potential volatility in the cost and efficiency of its hedging program. In addition, the company has reported a declining trend in net premiums written in recent years, resulting from the reduction in annuity production, and ceasing the acceptance of new life insurance business from its international markets.

The ratings of Ozark reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.

Ozark’s existing business model, which is focused primarily on selling simplified ordinary life products to the middle market through its captive agent channel, has faced challenges during COVID-19. Ozark’s historically stable earnings pattern has continued since its acquisition by NWLIC. AM Best will continue to monitor Ozark’s strategic value to NWLIC and the opportunities it presents, along with the execution of its ongoing integration.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Louis Silvers Senior Financial Analyst +1 908 439 2200, ext. 5802 louis.silvers@ambest.com

Christopher Sharkey Manager, Public Relations +1 908 439 2200, ext. 5159 christopher.sharkey@ambest.com

Thomas Rosendale Senior Director +1 908 439 2200, ext. 5201 thomas.rosendale@ambest.com

Jim Peavy Director, Public Relations +1 908 439 2200, ext. 5644 james.peavy@ambest.com

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