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A.M. Best Downgrades Credit Ratings of Modern Woodmen of AmericaA.M. Best has downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Rating to "a+" from "aa-" of Modern Woodmen of America (Modern Woodmen) (Rock Island, IL). The outlook of these Credit Ratings (ratings) has been revised to stable from negative. The rating downgrades reflect the increased proportion of the reserve profile attributable to interest sensitive annuities and universal life products and the impact of spread compression on earnings. Additionally, the majority of the annuity balances are being credited the guaranteed minimum rate, limiting Modern Woodmen's ability to support profitability margins as portfolio yields decline. Operating earnings have generally declined in recent years and return metrics are modest. Partially offsetting these negative rating factors are the company's strong position within the fraternal industry and its favorable risk-adjusted capitalization, which is supported by a well-diversified investment portfolio that is viewed as below-average risk relative to the industry. Additionally, Modern Woodmen has been active in its efforts to lower the concentration in interest sensitive liabilities and increase the proportion of sales in its ordinary life and variable annuity products, which are viewed as lower risk products. This press release relates to Credit Ratings 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 see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
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