OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with negative implications and downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a-” (Excellent) from “a” (Excellent) of National Western Life Insurance Company (NWLIC) (Centennial, CO). Concurrently, AM Best has removed from under review with negative implications and downgraded the Long-Term ICR to “bbb-” (Good) from “bbb” (Good) of National Western Life Group, Inc. (National Western) (headquartered in Austin, TX). The outlook assigned to these Credit Ratings (ratings) is stable. In addition, AM Best has removed from under review with developing implications and affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Ozark National Life Insurance Company (Ozark) (Kansas City, MO). The outlook assigned to these ratings is stable.
The ratings of NWLIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings of NWLIC were placed under review with negative implications on Oct. 11, 2023, following the announcement that National Western and S.USA Life Insurance Company, Inc. (S.USA), a subsidiary of Prosperity Life Group (Prosperity), and PHG Merger Inc. (a subsidiary of S.USA), signed a definitive merger agreement. The transaction closed on July 9, 2024, once regulatory approvals were received. In addition, redomestication of NWLIC to Arizona from Colorado has been completed and National Western has been delisted from the NASDAQ stock exchange.
The sale was an all-cash offer of $1.9 billion with each common stock of National Western issued and outstanding being converted into the right to receive $500 per share in cash at closing. The acquisition of National Western is expected to bring significant size and scale to Prosperity’s operations.
The downgrade in the ratings reflect the significant capital withdraw from NWLIC subsequent to closing as part of the overall deal funding. AM Best will continue to evaluate how transaction financing and future dividends will impact the risk-adjusted capitalization of NWLIC and monitor its integration into Prosperity.
The ratings of Ozark reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings of Ozark were placed under review with developing implications on Oct. 11, 2023, following the same transaction between Prosperity and National Western. Ozark maintains risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), despite a capital withdraw related to the Prosperity acquisition. Overall balance sheet metrics remain in line the industry averages. AM Best expects no immediate impacts to assessment areas but will continue to monitor post-acquisition results.
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