Fitch Ratings Affirms Boston Mutual Life Insurance At `A'

Business Wire, Feb 5, 2002

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 5, 2002

Fitch Ratings affirms Boston Mutual Life Insurance Company's (Boston Mutual) insurer financial strength rating at `A'. The Rating Outlook remains Stable.

Boston Mutual's rating reflects the company's strong presence in the worksite marketing segment, conservative management philosophy, and high quality, well-managed investment portfolio. Partially offsetting these positives are the challenges Boston Mutual faces in generating profitable growth due to statutory strain.

Boston Mutual sells group and individual life and accident and health insurance products through mainly independent worksite marketing specialists, general agents, agents, and brokers. BML targets the middle and lower income markets, considering them to be underserved. The company focuses on niche markets such as workplace marketing, military personnel, federal employees, the Hispanic market, municipalities, and labor unions. The company has successfully expanded its penetration of the senior citizens' market segment, partnering with specialty marketing organizations to distribute these products.

Fitch considers the quality and consistent performance of Boston Mutual's asset portfolio as a primary strength of the company. As of Sept. 30, 2001, approximately 99% of the bond portfolio was comprised of investment grade, publicly traded securities. While the company's allocation to mortgage loans is well above the industry average, conservative underwriting guidelines and diligence has led to enhanced portfolio yield and quality loans with no delinquencies in recent years.

Boston Mutual's capital level is considered adequate for its liability profile. The company's NAIC risk based capital ratio was 189 percent of the company action level at year- end 2000, strained by the consistent premium growth. BML has taken steps to improve the ratio going forward, including coinsurance arrangements to relieve surplus strain. The combination of higher first year commissions and growth in products that carry a high initial reserve is expected to result in modest growth in earnings and total adjusted surplus over the next few years. Fitch expects a year-end 2001 RBC ratio of close to 200%.

Boston Mutual is licensed in 49 states, D.C., Puerto Rico and U.S. military

bases in Europe. The company reported $594.4 million in total statutory admitted assets and $59.8 million in adjusted surplus at Sept. 30, 2001.

Entity/Issue/Type                  Action     Rating/Outlook

Boston Mutual Life Insurance Company
--Insurer financial strength       Affirm        'A'/Stable.