A.M. Best Affirms Rating of Aviva Life Insurance Company and Aviva Life Insurance Company of New York; Assigns Stable Outlook

Business Wire, Oct 15, 2004

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of Aviva Life Insurance Company (Aviva) (Wilmington, DE) and its subsidiary, Aviva Life Insurance Company of New York (Buffalo, NY). The rating outlook is being revised to stable.

This rating action reflects the financial support that has been provided to these U.S. operating companies by their ultimate parent, Aviva plc, and the strategic position the U.S. companies maintain within the Aviva Group (United Kingdom). This support has been demonstrated by the $60 million and $176 million capital contributions received in 2002 and 2003, respectively, and Aviva plc's commitment to support these companies as they grow their business. On an Embedded Value basis, which is primarily a measure of reporting profitability in Europe, the U.S. companies have improved their achieved operating profit in recent years, elevating their importance within the Aviva Group. Aviva plc is one of the leading insurance providers in the United Kingdom and other European markets, and it maintains a strong financial performance and strong risk-based capitalization.

On a U.S. statutory basis, Aviva and its subsidiary have posted losses in recent years due to the growth in new individual and group annuities since 2000, along with capital losses and reserve strengthening during that period. This has put considerable strain on the risk-adjusted capital position of the U.S. companies. Aviva plc's capital contributions have enabled Aviva and its subsidiary to grow its capital base, maintain an adequate level of risk-adjusted capital and reduce use of reinsurance (both internal and external) to support growth. In addition to this support, the companies maintain a diversified annuity liability profile, investment grade bond portfolio and fixed income expertise.

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