AM Best Affirms Credit Ratings of NLV Financial Corporation and Its Insurance Subsidiaries

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 (ERM).

These ratings also indicate continued favorable trends in NL Group’s balance sheet strength metrics, supported by its strongest level of risk-adjusted capitalization, which is projected to remain at that level, as measured by Best’s Capital Adequacy Ratio (BCAR). Continued strategic management initiatives have resulted in further growth of the group’s life/annuity sales, but sales for the industry could still be challenged to grow at a similar pace in the near term with economic uncertainty and its potential impact on the insurance industry’s competitive landscape. NL Group’s investment portfolio experienced some shifting during the year, with investment-grade corporate debt having the largest investment allocation decline, while mortgage-backed securities (MBSs) composed the biggest relative increase in investment allocation.

NL Group’s NAIC risk-based capital ratio remains strong and has stayed well above regulatory requirements over the past several years. However, there has been moderate continued volatility in NL Group’s net income levels, 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 has a long history of successfully growing its agency force consisting of career and independent agents targeting life insurance and annuity product solutions. Recent profitable growth has led to consistent improvement in market share position through its niche products, such as its offerings in the K-12 educator and indexed universal life markets. Although the ERM assessment is assessed as appropriate, the program continues to positively reflect NL Group’s well-established governance structure, culture and risk management controls, which are continuing to evolve and grow more sophisticated year over year.

Additionally, NL Group launched a funding agreement-backed note (FABN) program in 2024, which completed its first issuance of $500 million in January 2025. The FABN program acts as a natural extension of the FHLB program, which leverages internal investments and finance expertise to contribute meaningfully to NL Group’s bottom line. Most recently, NL Group recaptured all the assets of its captive reinsurer, Longhorn Reinsurance Company, resulting in a $19 million increase in assets in December 2024. AM Best will closely monitor the effects of these transactions on the whole organization.

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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