A.M. Best Affirms Ratings of EMC National Life Insurance Company
Proquest LLC |
The outlook for both ratings is stable.
The rating affirmations reflect EMCNL's strategic value to
Offsetting rating factors include EMCNL's high percentage of interest-sensitive reserves, which is above the industry average. The company remains exposed to the risk of spread compression if low interest rates persist and disintermediation risk if interest rates rise, as a significant amount of its fixed annuity reserves lack surrender protection. EMCNL also has a high allocation to structured securities as a percentage of capital. Furthermore, the company has sustained operating losses related to growing its workplace business, which remains highly competitive.
EMCC owns 49 percent of EMCNL's voting common stock (69.34 percent of the economic ownership when non- voting common stock is included). The lack of majority voting control results in a deviation of
Positive rating movement for EMCNL is unlikely in the near term. Factors that may result in negative rating actions include a significant or sustained decline in the company's risk-adjusted capitalization, unfavorable trends in operating performance and/or a material change in the strategic role of EMCNL to EMCC.
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