KBRA Affirms Rating for United Heritage Life Insurance Company
16 Apr 2026 | New York
KBRA affirms the A- insurance financial strength rating (IFSR) of United Heritage Life Insurance Company (UHLIC) with a Stable Outlook.
UHLIC’s rating reflects solid risk-adjusted capital and favorable capital growth trends, including a return to an above target CAL RBC ratio and record surplus at YE2025. The rating also reflects consistently profitable operations (albeit with a downdraft in 2022) and balanced earnings across different lines of business. During 2025, the bulk of net gains from operations came from individual annuities and group health. Historically, UHLIC’s investment yields have outperformed industry benchmarks, allowing it to generate robust spreads in past years. Currently, spreads remain adequate despite notable compression in recent years. During 2025, annuity and pre-need production was tempered to manage spreads, as competitive pressure on annuity crediting rates and pre-need growth rates compressed margins on these rate-based product lines. KBRA believes the company maintains a low-risk product portfolio, selling basic products such as pre-need, fixed annuities, and group life and health. During 2025, management’s actions – including the initial utilization of its FHLB program – allowed it to reposition its investment portfolio in a way that drove materially enhanced credit quality, increased investment income, shortened duration and improved cash flow testing.
Balancing these strengths are ongoing spread compression, certain investment portfolio metrics that compare unfavorably with industry norms, and strong competition in key product lines. Various factors pushed spreads down from 290 bps in 2018 to 122 bps by 4Q2025. Despite improvements in recent years, UHLIC’s investment portfolio continues to maintain a higher allocation to triple B rated bonds relative to the life insurance industry, although its exposure to non-investment grade bonds is consistent with industry averages. At YE2025, approximately 54% of its bond portfolio was in the BBB category, improved from 66% at YE2024. While UHLIC has historically benefited from United Heritage Financial Group’s shared services including employee benefits, investment management, human resources management, information technology, enterprise risk management and legal/regulatory, the organization – including UHLIC – is in the process of significantly reducing expenses due to the P&C business being in runoff. Expense reductions are on track with management’s plans. In addition, UHLIC is subject to substantial competition from established insurers that can have strong franchises, broad distribution relationships and greater resources. KBRA believes that the company’s enterprise risk management capabilities are sufficient for its risk profile and have evolved over time.
Factors that could positively impact the rating include sustained risk-adjusted capitalization above target and historical levels, sustained favorable earnings trends from multiple product lines, increased and sustained diversification of revenue and earnings, and sustained improvement in investment risk profile.
Factors that could negatively impact the rating include failure to maintain risk-based capitalization at/above long-term target, negative change in the company’s risk profile, unfavorable trends in profitability and/or diversification of sources of earnings, and loss of key business partners or distribution sources.
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