KBRA affirms its insurance financial strength ratings (IFSR) of BBB+ for Nassau Life Insurance Company (NNY), Nassau Life and Annuity Company (NLA), Nassau Life Insurance Company of Kansas (NKS), and Nassau Re (Cayman) Ltd. (NKY). At the same time, KBRA affirms the BB+ issuer rating for Nassau Financial Group, L.P. (NFG) and the B+ long-term credit rating on NFG’s $100 million of Class C non-voting redeemable perpetual preferred units. KBRA has also assigned a BB+ rating to the recently issued $425 million 7.875% senior notes due 2030 of The Nassau Companies of New York (NCNY), which are fully and unconditionally guaranteed by NFG. The Outlook for all ratings is Positive.

Nassau’s ratings reflect its multi-year transformation, which has strengthened capital, liquidity, and financial flexibility. The holding company structure provides diverse sources of funding and the ability to allocate resources across subsidiaries. Operational and distribution strengths have supported steady fixed indexed annuity growth and maintained a top-20 market position, with technology investments helping to diversify and expand sales channels. Nassau also benefits from the stable earnings contribution of a mature closed block and from an enterprise risk management framework that is embedded across the organization and continues to evolve through enhancements in asset-liability management and liquidity planning.

These strengths are balanced by profitability that, while supported by disciplined pricing, expense management, and stable earnings sources, can be obscured by accounting treatments, one-time items, and reinsurance structures. Nassau’s statutory capital profile is generally solid, though certain capital ratios remain below benchmark levels, with some reliance on surplus notes and reinsurance support. The company also operates in a highly competitive fixed and fixed indexed annuity market, where larger and more established carriers benefit from greater resources and brand recognition.

The Positive Outlook reflects Nassau’s demonstrated track record of raising equity capital, along with an expectation that it will increasingly generate internal capital to support its growth while maintaining solid capitalization at the operating companies and reasonable financial leverage at NFG, and that it will maintain a more consistent and robust pattern of statutory earnings and profitability. The Positive Outlook also assumes that Nassau will continue to execute its business plan in a prudent manner, while maintaining strong liquidity, a robust ERM program focused on continuous improvement, M&A discipline and patterns of regulated and non-regulated cash flows to NFG which are supportive of the holding company’s credit profile.

Factors that could lead to an upgrade include the development of sustained and robust statutory profitability to support internal capital generation, improvement in the quality of capital and statutory balance sheet metrics, a further strengthening of Nassau’s market position without materially increasing its risk profile, successful implementation of reinsurance and other risk management initiatives, and sustained proportion of cash flow originating from unregulated subsidiaries.

Conversely, factors that could lead to a downgrade include a decline in risk appetite metrics below management thresholds, material underperformance in the U.S. operating companies’ ability to generate consistent statutory profitability, acquisitions that materially increase Nassau’s risk profile, sustained deterioration in leverage and coverage ratios at NFG, and free cash flows from the asset management business falling materially short of expectations.

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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), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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