Best’s News & Research Service - August 06, 2015 10:37 AM (EDT)
A.M. Best Revises Outlook to Stable for National Farm Life Insurance Company
- August 06, 2015 10:37 AM (EDT)
Oldwick //BestWire// - A.M. Best has revised the outlook to stable from positive and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb+" of National Farm Life Insurance Company (NFLIC) (Fort Worth, TX).
The outlook revision to stable reflects a modest decline in operating earnings in the current year, flat first-year and single life insurance premiums and the potential for disintermediation risk in a rising interest rate environment.
The ratings recognize NFLIC's niche marketing strategy in reaching out to families in rural communities and the Hispanic market in Texas, a high quality investment portfolio and favorable levels of risk adjusted capitalization.
Partially mitigating rating factors include a narrow business profile that is concentrated in worksite marketing, with the vast majority of premiums generated from Texas. Additionally, NFLIC may be exposed to disintermediation risk under a rapidly rising interest rate environment and it has a large percentage of annuities with crediting rates at 4%, albeit with some flexibility to adjust crediting rates prospectively. While operating results are positive, they have declined modestly and the company's operating returns remain below peer benchmarks and industry averages.
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