A.M. Best Upgrades American Heritage Life Insurance

Business Wire, July 20, 1998

OLDWICK, N.J.--(BUSINESS WIRE)--July 20, 1998--A.M. Best Co. has upgraded American Heritage Life Insurance Co., Jacksonville, Fla. to "A " (Superior) from "A" (Excellent).

The rating reflects the company's well-established niche in the payroll-deduction market, diversified sources of earnings, favorable capital position, strong and improving GAAP earnings performance, and its high-quality investment portfolio. Offsetting these strengths are the challenges the company faces in increasing the scale and earnings of its actively marketed universal life segment and the impact of potential regulatory and competitive pressures on several core businesses.

American Heritage Life maintains good market positions, with three primary marketing divisions (ordinary, group and credit) that provide cross-selling opportunities. As a result, the company generates strong earnings, which--along with a successful public offering--have contributed to its favorable capital position.

American Heritage is one of the leading companies dedicated to work-site marketing, through which most of its products are available. The company's comprehensive portfolio allows employers and employees to obtain multiple products through one efficient source. Through its acquisitions of blocks of payroll deduction business from Security Life of Denver, Kentucky Home Mutual and other companies, American Heritage has increased its presence in the work-site market, as well as providing the opportunity for additional sales of new products during the re-enrollment process.

American Heritage also has developed a strategic alliance with Transamerica Assurance Co., whereby Transamerica will offer American Heritage supplemental health and disability products through its agents at the work site. The company has demonstrated its expertise and commitment to this growing market. Earnings are diversified between its individual, group and credit segments and have been improving on both a statutory and GAAP basis. This diversification gives the company the resources to maintain its growth strategy in the competitive work-site market through continued acquisitions of companies and blocks of business.

The company's investment portfolio is of high credit quality, consisting mostly of investment-grade fixed-income obligations and policy loans. Although policy loans account for more than one-third of invested assets, in association with its corporate-owned life insurance business, the company has little or no risk exposure, as these loans are 100% collateralized by the underlying policyholder reserves.

A.M. Best affirmed the ratings of the following American Heritage Life subsidiaries: Columbia Universal Life Insurance Co., Austin, Texas, "A-" (Excellent) and Concord General Life Insurance Co., Concord, N.H., "B " (Very Good). Keystone State Life Insurance Co., Philadelphia, was upgraded to "B " (Very Good) from "B" (Fair) in recognition of its acquisition by American Heritage Life on June 30, 1998.

A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.

    CONTACT: A.M. Best Co., Oldwick
              Jeffrey Dunsavage, 908/439-2200 ext. 5618
              e-mail: dunsavj@ambest.com