A positive rating action could occur following material expansion of the business profile into more creditworthy product lines that reduce the concentration of the business profile in interest sensitive products. Factors that could result in a negative rating action include an increased concentration of revenue or earnings in single product segments, an unfavorable trend in consolidated operating performance, and a material decline in equity or risk-adjusted capitalization as a result of operating losses or investment impairments.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 see A.M. Best's Recent Rating Activity web page. A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.
A.M. Best has assigned an issuer credit rating (ICR) of "bbb" to National Western Life Group, Inc. (NWLG) (headquartered in Austin, TX) (NASDAQ:NWLI). The outlook assigned to the rating is stable. Concurrently, A.M. Best has affirmed the financial strength rating of A (Excellent) and the ICR of "a" of National Western Life Insurance Company (NWLIC) (Denver, CO). The outlook for each of these ratings is stable. NWLG is the recently formed parent holding company of NWLIC. The rating assignment for NWLG reflects the holding company's recent formation as the publicly traded parent of NWLIC. NWLG has modest operations outside of its primary insurance subsidiary and has no outstanding financial leverage. The rating affirmations reflect NWLIC's favorable operating performance, which has supported growth in statutory capital, consolidated stockholders' equity and risk-adjusted capitalization. NWLIC benefits from international diversification by offering primarily equity indexed life and annuity products within the United States and to residents of international countries. International sales are generated from applications submitted by residents of South America, the Caribbean, Eastern Europe and Asia. A.M. Best notes that NWLIC mitigates the additional 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 NWLIC's large exposure to interest-sensitive liabilities, due to growth in annuities and equity-indexed life products. Additionally, the inclusion of indexed annuities in the Department of Labor's recently announced regulatory changes could have a material impact on NWLIC's annuity sales when implemented. The company's domestic life market has been challenged to maintain sales growth and has recorded large statutory losses and only modest GAAP earnings, which partially offset the profitability provided by other lines of business. Additionally, NWLIC has made the strategic decision to stop accepting applications from certain international markets, which is expected to cause a reduction in the segment's new business premium in the near term.