AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of National Life Insurance Company (NLIC) (Montpelier, VT) and its wholly owned subsidiary, Life Insurance Company of the Southwest (LSW) (Addison, TX). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “a” (Excellent) of the surplus notes of NLIC. Both companies are collectively known as National Life Group (NL Group) and are life insurance subsidiaries of NLV Financial Corporation (NLVF) (headquartered in Montpelier, VT), which is the intermediate holding company in the organization’s mutual holding company structure. AM Best also has affirmed the Long-Term ICR and the Long-Term IRs of “a-” (Excellent) of NLVF. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the Long-Term IRs.)

The ratings reflect NL Group’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.

These ratings also reflect mainly favorable trends in NL Group’s balance sheet strength metrics, supported by its very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is projected to remain at that level. The group has experienced strong and consistent sales growth momentum in excess of industry averages, although this has moderated more recently amid increased competition in the industry. The organization is relying increasingly on reinsurance to support its growth, as indicated by an upward trend in reinsurance leverage. NL Group’s investment portfolio, which is managed largely in-house, is allocated mainly to investment grade fixed-income assets. Although the mortgage portfolio is elevated, it has been decreasing as a percentage of overall invested assets during the past few years.

NL Group’s NAIC risk-based capital ratio remains strong and has stayed well-above regulatory requirements. However, NL Group’s net income levels have experienced moderate volatility, driven by non-core earnings that reflect GAAP accounting reserving changes for indexed products, as well as short-term movement in equity markets and interest-rate curves.

NL Group’s strong growth in its agency force continues despite ongoing pressures in the broader labor market. Through its niche products, such as its offerings in the K-12 educator and indexed universal life markets, NL Group has been able to grow its market share profitably. NL Group’s risk-management program continues to reflect positively the group’s well-established governance structure, detailed risk framework and comprehensive internal controls, as well as its strong cybersecurity program.

The following Long-Term IRs have been affirmed with stable outlooks:

NLV Financial Corporation—

— “a-” (Excellent) on $75 million 6.50% senior unsecured notes, due 2035

— “a-” (Excellent) on $200 million 7.50% senior unsecured notes, due 2033

National Life Insurance Company—

— “a” (Excellent) on $200 million 10.50% surplus notes, due 2039

— “a” (Excellent) on $500 million 5.25% surplus notes, due 2068

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 Performance Assessments, 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. For more information, visit www.ambest.com.

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