KBRA assigns insurance financial strength ratings (IFSR) of A- to National Western Life Insurance Company (NWLIC) and Ozark National Life Insurance Company (ONL), newly acquired subsidiaries of Prosperity Group Holdings, L.P. (PGH). At the same time, KBRA affirms the IFSRs of A- for each of the following insurance operating entities of PGH: Prosperity Life Assurance Ltd., Shenandoah Life Insurance Company, SBLI USA Life Insurance Company, Inc. and S.USA Life Insurance Company, Inc. The Outlook for all ratings is Stable.

Prosperity’s acquisition of National Western Life Group, Inc. (NWLGI) closed on July 9, 2024. NWLIC and ONL were subsidiaries of NWLGI. NWLIC is now a subsidiary of S.USA Life Insurance Company, Inc. and ONL is a subsidiary of NWLIC.

The ratings reflect solid capitalization, an experienced and credentialed executive management team, and the continued support of a committed investor. Additionally, the company has developed a credible position in middle-market M&A/reinsurance and has an established presence in the bank/broker dealer channel for fixed annuities. National Western’s independent distribution channels are complementary to Prosperity’s distribution channels. Prosperity continues to further develop its retail franchise and enhance its operating platforms. Prosperity benefits from relatively stable liabilities, including a mature closed block and an annuity portfolio that is predominantly fixed, indexed, and immediate, with no living benefit riders or secondary guarantees. The National Western book of business is stable and profitable.

Balancing these strengths are factors including execution risk related to continued organizational build out, ongoing systems and risk management investments, rapid growth, and the integration of newly acquired NWLGI. KBRA views the company’s enterprise risk management (ERM) as appropriate for its current stage of development and, while acknowledging material enhancements to-date, believes that ERM needs to continue to mature to keep pace with the company’s ongoing transformation and growth. New business strain, growth-related expenses, and lack of scale have been constraints on profitability but are nearing inflection points. The acquisition of NWL brings Prosperity to scale ahead of its targeted timeframe. Completing platform enhancement initiatives during 2024 is a priority and management expects capital needs for planned organic growth will become self-funding in the near term. Prosperity’s targeted organic and inorganic markets are competitive. Typically, Prosperity’s holding company is primarily reliant on third parties such as Elliott and its credit facility providers for near-term cash and capital resources.

Factors that could positively impact the rating include development of earnings and profitability materially ahead of plan while maintaining strong capitalization, sustained balance in business mix profile, evidenced in product reserves and earnings as well as in geographic mix of premiums, solidified market position in M&A/Reinsurance, enhanced market position in its targeted organic markets, development of material financial resources available to the holding company beyond additional borrowings or Elliott capital contributions, and development of material, sustained increases in risk-based capital. Factors that could negatively impact the rating include strategic plan execution that materially lags expected milestones, lack of continued ERM maturation consistent with Prosperity’s growth and transformation, inability to outrun new business strain, resulting in profitability materially behind plan, material inability to secure additional capital contributions from Elliott, lack of development of financial resources available to the holding company beyond additional borrowings or Elliott capital contributions, and lack of pricing discipline in M&A/reinsurance.

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Methodologies

• Insurance: Insurer & Insurance Holding Company Global Rating Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1005074

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