AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) of National Western Life Insurance Company (NWLIC) (Centennial, CO). Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Ozark National Life Insurance Company (Ozark) (Kansas City, MO). In addition, AM Best has affirmed the Long-Term ICR of “bbb” (Good) of National Western Life Group, Inc. (headquartered in Austin, TX) [NASDAQ: NWLI], the parent holding company of NWLIC and Ozark. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect NWLIC’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The ratings also reflect NWLIC’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its consistent GAAP operating earnings, although derivative accounting has resulted in some earnings volatility on a statutory accounting basis.

These strengths are offset by NWLIC’s high concentration of reserves in interest-sensitive products, elevating the risk of duration mismatches and spread compression, though high minimum guaranteed rate products are largely reinsured. These risks are also reduced through a hedging program. Although premiums increased each of the past two years, the company has experienced a declining trend in net premiums written over the past decade, driven by a reduction in annuity production, and a shift in strategy a few years ago that prompted NWLIC to cease accepting applications for new life insurance business from international markets. Despite this move, renewal premiums from international markets continue to represent a significant but declining portion of the group’s total premiums. NWLIC intends to focus on the U.S. annuity and life insurance marketplace.

The ratings reflect Ozark’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.

Ozark’s existing business model is focused primarily on selling simplified ordinary life insurance products to the middle market through its captive agent channel and has slowly declined over time, as measured by sales. Ozark’s historically stable earnings pattern has continued since its acquisition by NWLIC. AM Best will continue to monitor the execution of Ozark’s integration with NWLIC, particularly with respect to integration of its risk management framework within NWLIC. Ozark has made significant progress since the acquisition in adopting shared practices and integrating into NWLIC’s business processes.

AM Best views the holding company assessment for NWLIC as neutral with no financial or operating leverage.

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.

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