S&P Affirms National Farm Life Insurance 'BBBpi' Rtg.Business Editors NEW YORK--(BUSINESS WIRE)--(Standard & Poor's)--Jan. 30, 2001 Standard & Poor's today affirmed its triple-'Bpi' financial strength rating on National Farm Life Insurance Co. The rating is based on the company's adequate level of capitalization and strong liquidity, partially offset by marginal operating results and high geographic concentration. The company's products include participating whole life, nonparticipating whole life, twenty-year level term, and annual renewable term insurance Annual renewable term insurance See: Term insurance. . It also provides supplemental products, such as guaranteed insurability Guaranteed insurability A life and health insurance policy feature that enables the insured to add coverage at future times and at fixed and agreed-upon rates regardless of health conditions. , waiver of premium Waiver of premium A provision in an insurance policy that allows payment of insurance premiums to be permanently or temporarily stopped in the event the policyholder becomes incapacitated. , accidental death benefit A provision of a life insurance policy stating that if the insured—the person whose life has been insured—dies in an accident, the beneficiary of the policy—the person to whom its proceeds are payable—will receive twice the face value of the policy. , and dependent children insurance, all of which can be attached to its life insurance products. Finally, it also offers an ordinary individual deferred annuity Deferred Annuity A type of annuity contract that delays payments of income, installments or a lump sum until the investor elects to receive them. This type of annuity has two main phases, the savings phase in which you invest money into the account, and the income phase in which . Based in Fort Worth, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. , the company is licensed in and mainly writes in Texas. It began operations in 1946. Major Rating Factors: -- Capital adequacy is more than 300%, as measured by Standard & Poor's capital adequacy model, which is extremely strong. Total adjusted capital was $18.9 million at year-end 1999 versus $17.7 million in 1998, an increase of 6.4%. -- The company's liquidity ratio of 179.9% is strong, although below the industry median. -- Operating performance has been marginal, with a five-year average return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). of 0.9%, and a Standard & Poor's earnings adequacy ratio of 83.3%. In addition, the company has a history of volatility in its premium revenues: net premiums written increased 3.3% in 1999 to $11.9 million, having declined 9.2% in 1998. -- The company has high geographic and product-line concentration, with 96% of direct business in Texas and more than 96% in individual life insurance. Geographic concentration can increase a company's regulatory and competitive risk exposure. The company (NAIC NAIC See National Association of Investors Corporation (NAIC). :66532) is rated on a stand-alone basis. Ratings with a 'pi' subscript are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings. Ratings with a 'pi' subscript generally are not modified with "plus" or "minus" designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk Sovereign Risk The risk that a foreign central bank will alter its foreign-exchange regulations thereby significantly reducing or completely nulling the value of foreign-exchange contracts. or the credit quality of a parent company or affiliated group, Standard & Poor's said. -- CreditWire. Copyright 2001, Standard & Poor's Ratings Services |
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