KBRA Affirms Ratings of Certain Subsidiaries of Prosperity Group Holdings, L.P.

KBRA affirms the insurance financial strength ratings (IFSRs) of A- for each of the following insurance operating entities of Prosperity Group Holdings, L.P.: Prosperity Life Assurance Ltd., Shenandoah Life Insurance Company, SBLI USA Life Insurance Company, Inc. and S.USA Life Insurance Company, Inc. The Outlook for all ratings is Stable.

The rating reflects solid capitalization, an experienced and credentialed executive management team, and the continued support of a committed investor. Additionally, the company has developed a credible position in middle-market M&A/reinsurance and has an established presence in the bank/broker dealer channel for fixed annuities. NWL’s independent distribution channels are complementary to Prosperity’s distribution channels (acquisition of NWL pending). Prosperity continues to further develop its retail franchise and enhance its operating platform. Prosperity benefits from relatively stable liabilities, including a mature closed block and an annuity portfolio that is predominately fixed, indexed, and immediate, with no living benefit riders or secondary guarantees.

Balancing these strengths are factors including execution risk related to continued organizational build out, ongoing systems and risk management investments, rapid growth and its large, pending acquisition of NWL. KBRA views the company’s enterprise risk management (ERM) as appropriate for its current stage of development and, while acknowledging material enhancements to-date, believes that ERM needs to continue to mature to keep pace with the company’s ongoing transformation and growth. New business strain, growth-related expenses, and lack of scale have been constraints on profitability but are nearing inflection points. The acquisition of NWL will bring Prosperity to scale ahead of its targeted timeframe. Completing platform enhancement initiatives during 2024 is a priority and management expects capital needs for planned organic growth will become self-funding in the near term. Prosperity’s targeted organic and inorganic markets are competitive. Typically, Prosperity’s holding company is primarily reliant on third parties such as Elliott and its credit facility providers for near-term cash and capital resources.

Factors that could positively impact the rating include development of earnings and profitability materially ahead of plan while maintaining strong capitalization, sustained balance in business mix profile, evidenced in product reserves and earnings as well as in geographic mix of premiums, solidified market position in M&A/Reinsurance, enhanced market position in its targeted organic markets, development of material financial resources available to the holding company beyond additional borrowings or Elliott capital contributions, and development of material, sustained capital cushions at each (re)insurer. Factors that could negatively impact the rating include strategic plan execution that materially lags expected milestones, lack of continued ERM maturation consistent with Prosperity’s growth and transformation, inability to reach scale and outrun new business strain, resulting in profitability materially behind plan, material inability to secure additional capital contributions from Elliott, lack of development of financial resources available to the holding company beyond additional borrowings or Elliott capital contributions, and lack of pricing discipline in M&A/reinsurance.

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