S&P Afrms Merrill Lynch Life Ins Gp Rtgs; Otlk Stable

Business Wire, Feb 25, 2003

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 25, 2003

Standard & Poor's Ratings Services said today that it affirmed its 'A ' counterparty credit and financial strength ratings on Merrill Lynch Life Insurance Co. and ML Life Insurance Co. of NY (collectively, Merrill Lynch Insurance Group or MLIG).

The outlook is stable.

"The affirmations reflect MLIG's strong capitalization, good operating performance, its core relationship to its parent, Merrill Lynch & Co. Inc. (ML & Co.), and its high quality investment and liquidity profile," said Standard & Poor's credit analyst Robert Hafner. "Partially offsetting these strengths are the effects of equity market volatility on MLIG's assets under management, fee income and guaranteed minimum death benefit costs; challenges associated with its concentrated operational profile; and competitive pressures existing in the retail annuity market," Hafner added.

Standard & Poor's expects MLIG's separate account assets to grow reflecting increasing sales and reduced equity market volatility. Monthly market share penetration within Merrill Lynch's distribution system is expected to be 30%-35% by year-end 2003. GAAP pretax ROA is expected to be more than 75 basis points (bps) for the next three years. MLIG will maintain capitalization at more than 175%.

MLIG is ranked 24th in variable annuity assets under management for 2002. The company's effective affiliated distribution stems from its use of Merrill Lynch securities brokers, known as financial advisors, to market its insurance products.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.