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.

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