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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 26, 2021 02:49 PM (EDT)
AM Best has 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 Kansas City Life Insurance Company (Kansas City Life). The outlook of these Credit Ratings (ratings) is negative. Concurrently, AM Best has downgraded the FSR to B++ (Good) from A- (Excellent) and the Long-Term ICR to “bbb+” (Good) from “a-” (Excellent) of Grange Life Insurance Company (Grange Life) (Columbus, OH). The outlook of the FSR has been revised to stable from negative while the outlook of the Long-Term ICR is negative.
AM Best also has downgraded the FSR to B++ (Good) from A- (Excellent) and the Long-Term ICR to “bbb+” (Good) from “a-” (Excellent) of Old American Insurance Company (Old American). Additionally, AM Best has downgraded the FSR to B++ (Good) from A- (Excellent) and the Long-Term ICR to “bbb+” (Good) from “a-” (Excellent) of Sunset Life Insurance Company of America (Sunset Life). The outlook of the Long-Term ICRs has been revised to negative from stable while the outlook of the FSR is stable. All companies are domiciled in Kansas City, MO, unless otherwise specified. All companies are wholly owned subsidiaries of Kansas City Life.
The ratings of Kansas City Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating downgrades of Kansas City Life reflect a revision in its operating performance assessment to marginal from adequate. Return metrics for Kansas City Life on a one-year, three-year and five-year basis are lower than that of its peers and the overall industry. Kansas City Life’s earnings have declined and its investment income has fallen at a higher pace than that of the industry, which has negatively affected surplus growth. Kansas City Life has maintained its dividend as earnings have declined in recent years. The negative outlooks of Kansas City Life reflect the declining balance sheet metrics that have come as the result of negative operating trends.
The ratings of Old American reflect its balance sheet, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile, and appropriate ERM.
The rating downgrades of Old American reflect a revision in its operating performance assessment to marginal from adequate. Old American has been experiencing strain on capital and surplus due to high sales of its final expense product. Return metrics on a one-year, three-year and five-year basis are negative, and net income is negative three of the past five years. Net losses and significant dividends taken out of Old American, even in loss-making years, have led to a material decrease in its risk-adjusted capitalization. The negative Long-Term ICR outlook reflects AM Best’s uncertainty of the profitability of the maturing final expense business and the continued strain that Old American’s risk-adjusted capitalization will experience.
The ratings of Grange Life reflect its balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile, and appropriate ERM.
The rating downgrades of Grange Life reflect the rating downgrades of Kansas City Life and the decrease in lift that is provided from the ultimate parent.
The ratings of Sunset Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as adequate operating performance, limited business profile, and appropriate ERM.
The rating downgrades of Sunset Life reflect the rating downgrades of Kansas City Life and the decrease in lift that is provided from the ultimate parent.
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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.