Fitch Ratings Affirms Beneficial's 'A+' Rating

Business Wire, Sept 14, 2004

CHICAGO -- Fitch affirmed the 'A ' insurer financial strength rating of Beneficial Life Insurance Co. (Beneficial). Beneficial's Rating Outlook is Stable.

Beneficial transacts its business as Beneficial Financial Group. A strong risk-based capital position and the benefits of its values-based relationship with The Church of Jesus Christ of Latter-day Saints (the Church) support Beneficial's financial strength rating. Balanced against these strengths are the company's limited product offerings, modest size, and regional concentration in the Western U.S.

Management at Beneficial is committed to maintaining an above-average risk-based capital position for the benefit of policyholder safety and its financial strength ratings. Consequently, Fitch expects the absolute dollar amount of Beneficial's surplus to increase year-to-year, the capitalization ratio to improve toward the 10% to 11% targeted range, and the risk-adjusted capital ratio to remain near current levels that exceed Fitch's guidelines for the rating category.

Beneficial's affiliation with the Church helps attract both quality management and distribution, as well as providing a values based connection for many policyholders. In addition, Fitch believes that a shared values structure between Beneficial and many policyholders contributes to its strong persistency. Deseret Management Corporation is Beneficial's immediate parent and provides Beneficial financial flexibility through a flexible dividend policy.

Individual life insurance, primarily universal life and individual deferred annuities, is Beneficial's core business albeit of moderate size at $2 billion in reserves. The company rounds out its product offerings through strategic alliances. Growing another line of business to critical mass to provide the company with the benefit of diversification would favorably affect Beneficial's rating. The group life line of business is the most likely candidate to be that additional line of business.

GAAP profitability is calculated before charitable contribution to make it comparable to peer companies. Beneficial Life typically contributes 10% of taxable income to charity on a yearly basis. Annualized GAAP return on stockholders' equity (ROE) was 12.1% through the first half of 2004. ROE is calculated excluding realized investment gains or losses and adjusting for the effects of FAS 115.

Beneficial Life Insurance Company

-- Insurer financial strength affirmed at 'A '/Stable.