KBRA Affirms Ratings for Nassau Financial Group, L.P. and Subsidiaries

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), the B+ long-term credit rating on NFG’s $100 million of Class C non-voting redeemable perpetual preferred units, and the BB+ long-term credit rating on The Nassau Companies of New York (NCNY) $425 million 7.875% senior notes due 2030. The NCNY bonds are fully and unconditionally guaranteed by NFG. The Outlook for all ratings is Positive.

Nassau’s ratings reflect its proven platform and ability to execute its strategy, supported by the holding company’s demonstrated capital-raising capabilities and effective groupwide capital management. Operational and distribution strengths have supported steady fixed indexed annuity growth, allowing Nassau to build and maintain a top 20 market position in FIAs sold through the IMO channel. Over time, Nassau has expanded and diversified its distribution profile, invested in technology and digital tools, and developed a product suite designed to deliver reliable sales across different market environments. Sales diversification by product has increased, resulting in a balanced sales mix. Nassau also benefits from the stable earnings contribution of a mature, closed life insurance block and from an enterprise risk management framework that is embedded across the organization and continues to evolve through ongoing enhancements.

These strengths are balanced by statutory profitability that benefits from disciplined pricing, expense management, and stable earnings sources, but can be obscured by one-time items, reinsurance, and accounting treatment. 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 ability to raise equity capital and the expectation that increasing internal capital generation will support growth while maintaining solid operating company capitalization and reasonable financial leverage at NFG, alongside more consistent and robust statutory earnings over time. The Positive Outlook also assumes continued prudent execution of Nassau’s business plan, supported by strong liquidity, a robust and continuously improving ERM framework, disciplined M&A, and regulated and non-regulated cash flows that support NFG’s credit profile. The Positive Outlook remains in place pending resolution of the matter involving the rehabilitator of PHL, including the nature and potential magnitude of any claims or settlement, the timing and form of resolution, and any resulting reputational or financial impact on Nassau.

Factors that could lead to an upgrade include the development of sustained, robust statutory profitability to support internal capital generation, improved quality of capital and statutory balance sheet metrics, a track record of further enhanced market position without materially increasing the organization’s risk profile, demonstrated track record of successful implementation of reinsurance and other risk management initiatives, a larger and sustained proportion of cash flow to the holding company originating from unregulated operating subsidiaries, and resolution of the matter involving the rehabilitator of PHL without materially weakening Nassau’s financial or business profile.

Conversely, factors that could lead to a downgrade include a sustained decline in risk appetite statement metrics below management threshold levels, material underperformance in the U.S. operating companies’ ability to generate consistent robust statutory profitability, acquisitions that materially increase the risk profile of the Nassau group, sustained material deterioration in leverage and coverage ratios at NFG, free cash flows from the asset management business which are materially below management’s projections, and resolution of the matter involving the rehabilitator of PHL that materially weakens Nassau’s financial or business profile.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodology