AM Best has revised the outlook to negative from stable 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 The American Home Life Insurance Company (AHL) (Topeka, KS). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect AHL’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The revised Long-Term ICR outlook reflects a weakening balance sheet driven in large part by recent operating losses. Over the last few years, American Home Life’s operating performance has been impacted by elevated mortality associated with the COVID-19 pandemic, elevated surrenders driven by interest rates and higher general expenses due to systems upgrades and strategic initiatives. With several years of operating losses, surplus has been on a downward trend, declining 18% since year-end 2021. Risk-adjusted capital has also declined in line with surplus. Also impacting American Home Life’s balance sheet strength is an increasing reliance on reinsurance and elevated risk in its investment portfolio, which is driven by below-investment-grade bonds. While management has taken action to improve its operating performance, AM Best does not expect a meaningful improvement in the company’s surplus or risk-adjusted capital in the near term. AM Best will monitor American Home Life’s results and any associated impacts to the balance sheet strength.

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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