AM Best Revises Outlooks to Positive for Investors Heritage Life Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has revised the outlooks to positive from stable and
affirmed the Financial Strength Rating (FSR) of B+ (Good) and the
Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” of Investors
Heritage Life Insurance Company (IHLIC) (Frankfort, KY), which is
subsidiary of Aquarian Investors Heritage Holdings LLC (Aquarian).

The ratings reflect IHLIC’s balance sheet strength, which AM Best
categorizes as strong, as well as its marginal operating performance,
limited business profile and appropriate enterprise risk management
(ERM).

The positive outlooks reflect an improved balance sheet assessment,
which AM Best characterizes as strong due to improved risk-adjusted
capitalization levels, as measured by Best’s Capital Adequacy Ratio
(BCAR), reduced reinsurance leverage, and a reduction in investment risk
due to decreased exposure to NAIC Class 2 bonds and reduced equity
allocations. The company’s risk-adjusted capitalization levels improved
due to the gain on the sale of affiliated stock of Investors Heritage
Capital Corporation (IHCC) in conjunction with its acquisition by
Aquarian in 2018, as well as an additional capital contribution made by
Aquarian in the same year. IHCC also reduced its reinsurance leverage
significantly by recapturing business from an unrated reinsurer.

Operating performance has been marginal historically due to lack of
premium growth and low return metrics, but IHLIC has reported
significant growth in its premiums last year due to the launch of a new
multi-year guaranteed fixed deferred annuity product and has reversed a
trend of declining premiums from 2013-2017. However, operating
performance remains constrained given sales acquisition costs and narrow
spreads on its recently introduced fixed annuity product given high
crediting rates.

While the company’s business profile is assessed as limited given its
historical focus as a preneed and final expense writer with high
geographic concentration, it is evolving as it migrates toward annuity
products and expands geographically. IHLIC’s ERM is considered to be
appropriate and has improved under its new ownership structure.

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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Prafull Jhawar
Senior Financial Analyst
+1
908 439 2200, ext. 5214
prafull.jhawar@ambest.com

Rosemarie
Mirabella
Director
+1 908 439 2200, ext. 5892
rosemarie.mirabella@ambest.com

Christopher
Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
christopher.sharkey@ambest.com

Jim
Peavy
Director, Public Relations
+1 908 439
2200, ext. 5644
james.peavy@ambest.com