Press Release - SEPTEMBER 15, 2017

A.M. Best Affirms Credit Ratings of Kansas City Life Insurance Company and Its Subsidiaries


CONTACTS:
 Erik Miller
Senior Financial Analys
+1 908 439 2200, ext.5187
erik.miller@ambest.com

Ken Johnson, CFA, CAIA, FRM
Senior Director
+1 908 439 2200, ext. 5056
ken.johnson@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

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

FOR IMMEDIATE RELEASE

OLDWICK - SEPTEMBER 15, 2017
A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Kansas City Life Insurance Company (Kansas City Life). Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” of Kansas City Life’s wholly owned subsidiary, Sunset Life Insurance Company of America and its final expense life insurance subsidiary, Old American Insurance Company. The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Kansas City, MO. These companies are collectively referred to as Kansas City Life Group.

The ratings of Kansas City Life reflect its adequate risk-adjusted capital position and strong balance sheet with no long-term debt or operating leverage, as well as Kansas City Life’s financial flexibility and liquidity, which remain more than adequate to support the company’s risk profile. Offsetting rating factors include the company’s lack of consistent growth in ordinary life premium, above-average exposure to interest-sensitive liabilities and material exposure to real estate, particularly commercial mortgage loans.

Despite the inconsistent statutory earnings results, Kansas City Life’s ability to deliver consistently profitable operating performance, together with a reduction in the level of stockholder dividends as a result of the reverse/forward stock split in 2015, has enabled the company to maintain an adequate level of risk-adjusted capitalization. Kansas City Life’s balance sheet remains strong, due in part to the benefits from the liability-driven management of its products, which primarily consists of fixed and variable annuities, universal life insurance, and term life insurance. Kansas City Life’s investment portfolio is composed mainly of high quality (NAIC class 1/2), publicly traded, investment-grade fixed income securities. A.M. Best notes that approximately 27% of invested assets are allocated to investments with real estate exposure, which exposes the group to some concentration risk, but A.M. Best believes this is partially offset by the group’s strong sector and geographical diversification in the segment.

A.M. Best also is concerned about Kansas City Life’s trend of declining operating profits for the last three years, due in part to the low-yield environment and historically flat sales. In addition, a large portion of reserves are subject to high minimum interest rate guarantees, which could result in spread compression in future periods if interest rates remain at current levels.

A negative rating action could occur if risk-adjusted capital were to decline, or if operating trends decline further. In addition, a negative rating action could be taken if Kansas City Life Group were to significantly increase the risk profile of their investment portfolio, leading A.M. Best to view the balance sheet as less secure.

This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.


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