KBRA Affirms Rating For Modern Woodmen of America
25 Oct 2024 | New York
KBRA affirms the AA- insurance financial strength rating (IFSR) for Modern Woodmen of America ("Modern Woodmen", "MWA", or "the Society"). The Outlook is Stable.
The rating reflects Modern Woodmen’s strong risk-adjusted capital position, steady surplus growth, and sound financial management. As the third-largest fraternal benefit society in the U.S., the organization benefits from experienced leadership and a robust career distribution system, contributing to revenue stability and improved agent retention. Its diversified, relatively high-quality investment portfolio is backed by strong liquidity, with significant borrowing capacity from the FHLB of Chicago and Northern Trust. Additionally, Modern Woodmen’s highly developed ERM framework ensures effective risk management and improvements in its reserve mix and asset-liability management further strengthen its balance sheet profile. With profitability pressures easing in the current interest rate environment, the Society’s earned spreads have improved.
Balancing these credit strengths are challenges in the competitive middle-income life insurance market, particularly in growing membership amidst competition from both commercial carriers and fraternal peers. While the Society is addressing this through expanded marketing and product diversification, its above-average exposure to BBB-category bonds presents some risk, despite efforts to mitigate this through portfolio reinvestments in higher-rated securities. Furthermore, maintaining long-term profitability and earnings stability will require continued management of earned spreads across all interest sensitive product lines.
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