AM Best confirms credit ratings of Ohio National Financial Services, Inc. and its affiliates

OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best confirmed the financial strength rating (FSR) of A (excellent) and the long-term issuer credit ratings (long-term ICR) of “a +” (excellent) of The Ohio National Life Insurance Company and its subsidiary wholly owned, Ohio National Life Assurance Corporation (collectively referred to as Ohio National Life Group). These companies are the primary insurance subsidiaries of Ohio National Financial Services, Inc. (ONFS), which is an intermediary holding company wholly owned by Ohio National Mutual Holdings, Inc. At the same time, AM Best confirmed the FSR of A- (Excellent) and the long-term ICR of “a-” (Excellent) from National Security Life and Annuity Company (NSLAC). In addition, AM Best has confirmed the long-term ICR of “bbb +” (Good) and all long-term issuance credit ratings (long-term IR) of the ONFS. The outlook for these credit ratings (ratings) is stable. All of the companies are headquartered in Cincinnati, OH. (See below for a detailed list of long-term IRs).

The ratings reflect the strength of the Ohio National Life Group balance sheet, which AM Best considers to be very strong, as well as its strong operating performance, neutral business profile and appropriate management of business risks. The group’s risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), is at the highest level, and despite a decline in operating results in 2020, AM Best predicts an improvement in results in the future. It continues to show favorable premium growth trends across major life and disability insurance product lines. The Ohio National Life Group distribution channels also continue to diversify and expand.

In early 2022, the group is expected to finalize a sponsored demutualization with Constellation Holdings with the aim of further strengthening its capital position and providing opportunities for future growth.

AM Best notes that the group’s risk-adjusted capitalization has been improved through the issuance of excess notes and the use of captive structures to support redundant statutory reserves and reduce the volatility of its life annuity riders. AM Best considers that the group’s financial leverage and consolidated interest coverage ratios are within acceptable ranges.

NSLAC’s ratings reflect the strength of its balance sheet, which AM Best considers to be very strong, as well as its adequate operational performance, very limited business profile and proper management of business risks. The ratings also reflect the strength and support of the Ohio National Life Group. Despite the absence of new business, the entity remains well capitalized with high capital quality and liquidity.

The following long-term IRs have been confirmed with a stable outlook:

Ohio National Financial Services, Inc.—

– “bbb +” (Bond) on 5.55% senior unsecured notes of $ 425 million, due January 2030

– “bbb +” (bond) on $ 250 million of 6.625% senior unsecured notes, due May 2031

The Ohio National Life Insurance Company—

– “a-” (Excellent) on excess notes of $ 50 million at 8.50%, due May 2026

– “a-” (Excellent) on excess notes of $ 250 million at 6.875%, due June 2042

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