Fitch Ratings revises EquiTrust’s outlook to Negative

Fitch Ratings has affirmed EquiTrust Life Insurance Co.'s Insurer Financial Strength (IFS) rating at 'A-'. The Rating Outlook has been revised to Negative from Stable, Fitch said in a news release.

The Negative Outlook reflects holding company and organizational changes that have created material dividend requirements at EquiTrust to support debt service at its new parent, Amistad Financial Group, LLC (Amistad).

Fitch expects the new organizational and holding company debt to primarily be serviced by dividends from EquiTrust. The large dividend requirement could strain capital and limit future growth opportunities. The dividends will also limit the insurer's future financial flexibility.

The rating reflects EquiTrust's capital position, strong financial performance and consistently improving market position. This is partially offset by some elevated investment risk due to allocations to non-traditional short-term assets and exposure to private letter ratings and less-liquid asset classes.

The news release outlined the reasons behind the new rating:

Key rating drivers

Ownership Change: In November 2025, EquiTrust became part of Amistad Financial Group, LLC. EquiTrust's former majority shareholders retained a minority interest in Amistad following the transaction. Amistad's ownership is diversified, with no shareholder owning more than 10%. Despite the change in ownership, the organization continues to be led by the same core leadership team, supporting managerial continuity through the transition. Amistad intends to operate as a diversified financial services firm, including offering investment and asset management services.

New Leverage: Amistad and its affiliates hold approximately $3 billion debt outstanding. The previous ownership structure was unlevered, and the introduction of debt is a significant credit consideration for Fitch due to the potential pressure on capitalization and financial flexibility. The holding company currently has about 30% financial leverage, which is above Fitch's expectations for the current capitalization and leverage score. Fitch expects financial leverage to decline in order to maintain the current IFS rating.

Financial Performance and Coverage: Under the new ownership structure and increased financial leverage, Fitch expects EquiTrust to provide material dividend support for organizational debt service. Although operating performance was strong in 2025, projected dividend requirements represent a significant portion of earnings. EquiTrust's financial performance and debt service coverage is therefore a key credit consideration. Fitch believes an earnings decline would likely pressure EquiTrust's capital position.

Investment Risk and Illiquidity Considerations: EquiTrust's investment strategy seeks to enhance risk-adjusted returns through allocations to structured securities, private securities and alternative asset classes. As of YE 2025, nearly 98% of the bond portfolio was investment grade. Fitch's risky asset ratio declined to around 60% at YE 2025, comparing favorably with the industry. In addition, exposure to collateralized loan obligations (CLOs) has moderated and is now more in line with industry averages.

Despite these improvements, the company holds material investments in non-traditional short-term assets, primarily CLOs, which are not captured in Fitch's standard investment risk metrics. Portfolio liquidity remains weaker than that of most peers, with Level 3 assets representing approximately 44% of the bond portfolio, compared with an industry average of about 13%. Fitch also views EquiTrust's above-average use of private letter ratings as a potential risk.