Press Release|Insurance

KBRA Affirms Rating for Heritage Life Insurance Company

30 Jun 2026   |   New York

Contacts

KBRA affirms the A- insurance financial strength rating (IFSR) of Heritage Life Insurance Company (HLIC). The Outlook for the IFSR is Stable. HLIC is a stock life insurance company domiciled in Arizona that reinsures life and annuity products as well as supplementary contracts.

Key Credit Considerations

The rating on HLIC reflects solid capitalization, a conservative liquidity position, and an experienced leadership team. HLIC’s year-end 2025 CAL RBC ratio of 444% has steadily improved in recent years, and was supported by recent capital infusions, including a $500 million equity contribution in 2024 and a $600 million equity contribution in 2025. Liquidity is strong, with HLIC maintaining nearly $2.4 billion in cash and equivalents as of 1Q26. The investment portfolio is well-diversified with roughly two-thirds of invested assets held in bonds, over 90% of which are investment-grade. Supplemental borrowing capacity through FHLB lines and bank facilities, together with a disciplined duration‐ mismatch limit, further supports HLIC’s capital position. Executive leadership is long-tenured and has executed more than 40 reinsurance transactions with over 30 cedants since 2012.

Balancing these strengths are HLIC’s concentration in spread-based annuity reinsurance. This exposes the company to spread compression in falling-rate environments and disintermediation risk when rates rise, though spreads have thus far stayed at or above management’s internal target. As of November 2025, HLIC is now part of the Amistad Financial Group, LLC (Amistad) organization, which provides the company access to a larger balance sheet and back-office and ERM capabilities. However, Amistad is more highly levered than prior ownership, which could limit HLIC’s ability to obtain capital for growth opportunities. Earnings remain heavily dependent on a small number of treaties, heightening counterparty and concentration risk despite the ability to pause forward-flow business. Statutory results since 2023 have been negatively impacted by first-year commissions and ceding allowances paid. Management expects this new business to meet long-term return targets, which will improve reported statutory results prospectively. Finally, HLIC operates in an increasingly competitive annuity reinsurance market dominated by larger, more established players; success in moving up-market will require disciplined underwriting and continued capital support.

Rating Sensitivities

Consistent operating and net income that results in internal generation of capital, material favorable variance to forecasts provided to KBRA and/or further diversification of HLIC’s liabilities could result in positive rating action. Material deterioration in risk-based capitalization below company targets, including unexpected material dividend requirements to service holding company debt, a material adverse change in risk profile and/or material unfavorable variance to forecasts provided to KBRA could result in negative rating action.

To access ratings and relevant documents, click here.

Click here to view the report.

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.

Doc ID: 1015699