KBRA Assigns Ratings to National Western Life and Ozark National and Affirms Other Subsidiaries of Prosperity Group Holdings L.P.
July 16 2024 - 11:42AM
Business Wire
KBRA assigns insurance financial strength ratings (IFSR) of A-
to National Western Life Insurance Company (NWLIC) and Ozark
National Life Insurance Company (ONL), newly acquired subsidiaries
of Prosperity Group Holdings, L.P. (PGH). At the same time, KBRA
affirms the IFSRs of A- for each of the following insurance
operating entities of PGH: Prosperity Life Assurance Ltd.,
Shenandoah Life Insurance Company, SBLI USA Life Insurance Company,
Inc. and S.USA Life Insurance Company, Inc. The Outlook for all
ratings is Stable.
Prosperity’s acquisition of National Western Life Group, Inc.
(NWLGI) closed on July 9, 2024. NWLIC and ONL were subsidiaries of
NWLGI. NWLIC is now a subsidiary of S.USA Life Insurance Company,
Inc. and ONL is a subsidiary of NWLIC.
The ratings reflect solid capitalization, an experienced and
credentialed executive management team, and the continued support
of a committed investor. Additionally, the company has developed a
credible position in middle-market M&A/reinsurance and has an
established presence in the bank/broker dealer channel for fixed
annuities. National Western’s independent distribution channels are
complementary to Prosperity’s distribution channels. Prosperity
continues to further develop its retail franchise and enhance its
operating platforms. Prosperity benefits from relatively stable
liabilities, including a mature closed block and an annuity
portfolio that is predominantly fixed, indexed, and immediate, with
no living benefit riders or secondary guarantees. The National
Western book of business is stable and profitable.
Balancing these strengths are factors including execution risk
related to continued organizational build out, ongoing systems and
risk management investments, rapid growth, and the integration of
newly acquired NWLGI. KBRA views the company’s enterprise risk
management (ERM) as appropriate for its current stage of
development and, while acknowledging material enhancements to-date,
believes that ERM needs to continue to mature to keep pace with the
company’s ongoing transformation and growth. New business strain,
growth-related expenses, and lack of scale have been constraints on
profitability but are nearing inflection points. The acquisition of
NWL brings Prosperity to scale ahead of its targeted timeframe.
Completing platform enhancement initiatives during 2024 is a
priority and management expects capital needs for planned organic
growth will become self-funding in the near term. Prosperity’s
targeted organic and inorganic markets are competitive. Typically,
Prosperity’s holding company is primarily reliant on third parties
such as Elliott and its credit facility providers for near-term
cash and capital resources.
Factors that could positively impact the rating include
development of earnings and profitability materially ahead of plan
while maintaining strong capitalization, sustained balance in
business mix profile, evidenced in product reserves and earnings as
well as in geographic mix of premiums, solidified market position
in M&A/Reinsurance, enhanced market position in its targeted
organic markets, development of material financial resources
available to the holding company beyond additional borrowings or
Elliott capital contributions, and development of material,
sustained increases in risk-based capital. Factors that could
negatively impact the rating include strategic plan execution that
materially lags expected milestones, lack of continued ERM
maturation consistent with Prosperity’s growth and transformation,
inability to outrun new business strain, resulting in profitability
materially behind plan, material inability to secure additional
capital contributions from Elliott, lack of development of
financial resources available to the holding company beyond
additional borrowings or Elliott capital contributions, and lack of
pricing discipline in M&A/reinsurance.
To access rating and relevant documents, click here.
Click here to view the report.
Methodologies
- Insurance: Insurer & Insurance Holding Company Global
Rating Methodology
- ESG Global Rating Methodology
Disclosures
Further information on key credit considerations, sensitivity
analyses that consider what factors can affect these credit ratings
and how they could lead to an upgrade or a downgrade, and ESG
factors (where they are a key driver behind the change to the
credit rating or rating outlook) can be found in the full rating
report referenced above.
A description of all substantially material sources that were
used to prepare the credit rating and information on the
methodology(ies) (inclusive of any material models and sensitivity
analyses of the relevant key rating assumptions, as applicable)
used in determining the credit rating is available in the
Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be
located here.
Further disclosures relating to this rating action are available
in the Information Disclosure Form(s) referenced above. Additional
information regarding KBRA policies, methodologies, rating scales
and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit
rating agency registered with the U.S. Securities and Exchange
Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is
registered as a CRA with the European Securities and Markets
Authority. Kroll Bond Rating Agency UK Limited is registered as a
CRA with the UK Financial Conduct Authority. In addition, KBRA is
designated as a designated rating organization by the Ontario
Securities Commission for issuers of asset-backed securities to
file a short form prospectus or shelf prospectus. KBRA is also
recognized by the National Association of Insurance Commissioners
as a Credit Rating Provider.
Doc ID: 1005074
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Analytical Contacts
Donna Halverstadt, Managing Director (Lead Analyst) +1
646-731-3352 donna.halverstadt@kbra.com
Carol Pierce, Senior Director +1 646-731-3307
carol.pierce@kbra.com
Ethan Kline, Associate +1 646-731-1278 ethan.kline@kbra.com
Peter Giacone, Senior Managing Director (Rating Committee Chair)
+1 646-731-2407 peter.giacone@kbra.com
Business Development Contact
Tina Bukow, Managing Director +1 646-731-2368
tina.bukow@kbra.com