Western & Southern Financial Group's Positive Outlook Upgrade by AM Best

AM Best has upgraded the outlook from stable to positive for the Financial Strength Rating and Long-Term Issuer Credit Ratings of the life insurance subsidiaries of Western & Southern Financial Group, Inc. The subsidiaries, assessed with an A+ (Superior) rating and based primarily in Cincinnati, Ohio, include The Western and Southern Life Insurance Company, Western-Southern Life Assurance Company, Columbus Life Insurance Company, Integrity Life Insurance Company, National Integrity Life Insurance Company, and The Lafayette Life Insurance Company. Gerber Life Insurance Company, located in White Plains, New York, also received the same positive revision in outlook, along with its reaffirmed ratings.

These updates are largely attributed to the strong balance sheets, consistent operating performance, favorable business profiles, and robust enterprise risk management (ERM) systems identified in both Western & Southern Financial Group and Gerber Life.

Factors contributing to the positive outlook for Western & Southern Financial Group are the improved operating performance metrics observed over the past five years and the expectation to maintain high levels of risk-adjusted capitalization through Best's Capital Adequacy Ratio (BCAR). Although the BCAR has experienced a slight decline due to significant annuity volumes, AM Best anticipates ongoing capital growth from this business sector. The group is equipped with a liquidity plan to address potential financial stress within its portfolio, though certain market impacts on structured securities and private credit remain untested.

Within the competitive U.S. life insurance and annuity market, Western & Southern Financial Group benefits from financial flexibility through access to multiple liquidity sources, such as senior notes and Federal Home Loan Bank memberships. The company manages a diversified investment strategy using internal management and minimal external coinsurance, although it faces challenges related to interest rate fluctuations and near-term liquidity needs. The group has also diversified its product portfolio, helping it to maintain its market position despite high competition.

The positive revision for Gerber Life stems from its increasing contribution to group-wide premiums and earnings, coupled with its strong brand recognition and early adoption of digital distribution for guaranteed issue insurance products. Gerber Life continues to leverage its position in the direct-to-consumer market through its Fabric platform.

AM Best will keep monitoring the impact of macroeconomic conditions on companies' financial metrics, investment performance, and potential asset-liability misalignments. The companies' ability to meet operating performance expectations under the current business strategy will also be evaluated.

Affirmed ratings with revised positive outlooks include:

• Western & Southern Financial Group, Inc.: "a" (Excellent) on $500 million senior unsecured notes due 2033
• The Western and Southern Life Insurance Company: "a+" (Excellent) on $500 million surplus notes due 2061
• The Western and Southern Life Insurance Company: "a+" (Excellent) on $500 million surplus notes due 2049

For further information, including details on individual office responsibilities and rating disclosures, visit AM Best's website.