(The following statement was released by the rating agency)
NEW YORK, April 05 (Fitch) Fitch Ratings today affirmed the 'BBB+' Issuer
Default Rating (IDR) of NLV Financial Corp. (NLVF) and the 'A' Insurer
Financial Strength (IFS) ratings of National Life Insurance Company
(Vermont)(NLIC) and Life Insurance Company of the Southwest (LSW) - collectively
known as the National Life Group (NLGroup). A complete list of ratings follows
at the end of this release. The Rating Outlook for all ratings is Stable.
Subsequent to these actions, Fitch has withdrawn its ratings of NLGroup. Fitch
has decided to discontinue the ratings, which are uncompensated.
The affirmation is based on Fitch's view that NLGroup's full-year 2012 operating
results are in line with expectations for the current rating. Financial leverage
remains moderate, and statutory capitalization is sound.
Fitch views NLGroup's profitability and interest coverage as relatively low and
anticipates the company will have difficulty significantly improving earnings
in the current low interest rate environment. Earnings coverage of interest on
debt was 4.8x as of Dec. 31, 2012 compared with 4.6x at year-end 2011.
NLGroup's statutory capitalization is sound. The NAIC risk-based capital (RBC)
ratio was 420% at year-end 2012 compared to 393% at the end of 2011. Operating
leverage -- defined as statutory general account liabilities excluding AVR in
relation to total adjusted capital (TAC) -- declined to 11.7x from 12.6x over
Fitch views NLGroup's financial leverage ratio of 22% at year-end 2012 and 2011
as moderate and in line with rating expectations. The total financing and
commitments (TFC) ratio is low at 0.3x. Surplus notes in relation to total
adjusted capital (TAC) are 14% compared to Fitch's maximum guideline of 15% for
Fitch has affirmed with a Stable Outlook and then withdrawn the following
NLV Financial Corp.
--IDR at 'BBB+';
--$199 million 7.5% senior notes due Aug. 15, 2033 at 'BBB';
--$68 million 6.5% senior notes due March 15, 2035 at 'BBB'.
National Life Insurance Company (Vermont)
--IFS at 'A';
--IDR at 'A-';
--$200 million of 10.5% surplus notes due Sept. 15, 2039 at 'BBB+'.
Life Insurance Company of the Southwest
--IFS at 'A'.
Cynthia J. Crosson
Fitch Ratings, Inc.
One State Street Plaza
New York, New York 10004
Julie A. Burke, CPA, CFA
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email:
Additional information available at 'www.fitchratings.com'. The ratings above
were unsolicited and have been provided by Fitch as a service to investors.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (January 2013).
Applicable Criteria and Related Research
Insurance Rating Methodology ?????? Amended
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