AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Investors Heritage Life Insurance Company (IHLIC) (Frankfort, KY). The outlook of the FSR is stable.

The ratings reflect IHLIC’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The negative outlook for the Long-Term ICR reflects a decline in IHLIC’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), to adequate from strong. The decline in risk-adjusted capitalization was driven by notable increases in non-equity security and interest rate risks. AM Best will continue to monitor IHLIC’s capital position as the organization continues to grow its liability profile. The negative outlook also reflects an increased exposure to private credit assets. While the private allocation is diversified and provides IHLIC with a strong yield, it is increased from historical levels but less than many of its peers. The organization strategically uses affiliated and unaffiliated reinsurance support to minimize the impact of new business strain.

IHLIC has made progress in improving its operating performance in 2025, as the company generated its first pre-tax operating gain since 2022. The improvement was largely driven by lower new sales strain from annuity sales; however, direct premium declined, resulting in lower commission expenses and a smaller increase in selling, general & administrative expenses year-over-year. While net investment income declined slightly, this was due to the statutory accounting of the company’s equity risk hedging program. AM Best observes positive earnings momentum from late 2025, through first-quarter 2026, resulting in strong growth of pre-tax operating earnings and net income.

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