AM Best


A.M. Best Affirms Ratings of Ohio National Financial Services, Inc. and Its Subsidiaries


CONTACTS:

Frank Walko
Financial Analyst
(908) 439-2200, ext. 5072
frank.walko@ambest.com

Rosemarie Mirabella
Assistant Vice President
(908) 439-2200, ext. 5892
rosemarie.mirabella@ambest.com

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JULY 22, 2015 04:36 PM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of The Ohio National Life Insurance Company (ONLIC) and its wholly owned subsidiary, Ohio National Life Assurance Corporation (ONLAC) (together referred to as the Ohio National Life Group). These companies are the principal insurance subsidiaries of Ohio National Financial Services, Inc. (ONFS), which is an intermediate holding company wholly owned by Ohio National Mutual Holdings, Inc. Concurrently, A.M. Best has affirmed the ICR of "a-" and all existing issue ratings of ONFS. (See below for a detailed listing of the issue ratings).

Additionally, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of "a+" of National Security Life and Annuity Company (NSLAC) (New York, NY). The outlook for all ratings is stable. All companies are headquartered in Cincinnati, OH, unless otherwise specified.

The affirmation of the ratings for the Ohio National Life Group reflects its expanding business profile, overall middle-market position within the individual life and variable annuity market, continued positive trends of individual life sales and stable adjusted GAAP operating results, along with adequate risk-adjusted capitalization ratios. The ratings also recognize expansion into retirement services and strong front-end risk management practices embedded in newer variable annuity product designs.

A partially offsetting rating factor is above-average separate account exposure, which contributes to potential equity market and interest rate sensitivity, although these risks are partially offset by hedging and utilization of external reinsurance. While risk-adjusted capitalization remains adequate, it has been enhanced by the use of captives to support redundant reserves and the issuance of surplus notes. Additionally, the group is expanding into the highly competitive retirement services market. Financial leverage, when measured on a tangible capital basis, is elevated, although it is within the higher range of A.M. Best's expectations when computed on a total capital basis. Interest coverage remains below A.M. Best's expectations for the current rating level with limited additional financial flexibility. However, interest coverage is partially mitigated by some holding company liquidity, and there are no scheduled debt maturities until 2020.

The ratings of NSLAC reflect its strategic importance as the New York marketing arm for life and annuity products, favorable operating trends and strong risk-adjusted capitalization. These strengths are partially offset by a modest business and earnings profile relative to the group.

The following issue ratings have been affirmed with a stable outlook:

Ohio National Financial Services, Inc.

— "a-" on $250 million 6.625% senior unsecured notes, due May 2031

— "a-" on $300 million 6.375% senior unsecured notes, due April, 2020

The Ohio National Life Insurance Company

— "a" on $50 million 8.50% surplus notes, due May, 2026

— "a" on $250 million 6.875% surplus notes, due June, 2042

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.


Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.