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AM Best Revises Issuer Credit Rating Outlook to Stable for Investors Heritage Life Insurance Company

BY Business Wire | CORPORATE | 07/10/25 02:51 PM EDT

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of ?bbb+? (Good) of Investors Heritage Life Insurance Company (IHLIC) (Frankfort, KY). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect IHLIC?s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The revised Long-Term ICR outlook to stable from negative reflects improved balance sheet metrics driven by a capital contribution from Aquarian Insurance Holdings LLC (AIH) and surplus relief from a block reinsurance transaction with New Reinsurance Company Ltd. (New Re) (a subsidiary of Munich Reinsurance Company). The absolute level of capital and surplus increased 52% to $281 million in 2024, while risk-adjusted capitalization, as measured by Best?s Capital Adequacy Ratio (BCAR), improved to strong from weak. The reinsurance agreement with New Re was amended in the first quarter of 2025 to allow reinsurance on new Heritage Growth Annuity product premium, which should provide further surplus relief going forward while helping to stabilize operating performance. Additionally, the investment portfolio appears to be shifting to a more conservative allocation, with a trend of increasing allocation to bonds while the allocations to mortgages, common stock, and long-term strategic (Schedule BA) assets decrease.

Partially offsetting the positive rating factors is an increase in financial leverage at the parent company, AIH, as well as a low but increasing reliance on reinsurance. AM Best will closely monitor the effects of these changes on the whole organization.

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.

Copyright ? 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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