A.M. Best Affirms Ratings of the Kansas City Life Group of Companies

Business Wire, Dec 7, 2007

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a" of Kansas City Life Insurance Company (Kansas City Life) (NASDAQ: KCLI) and its subsidiary, Sunset Life Insurance Company of America. Additionally, A.M. Best has affirmed the FSR of B (Good) and ICR of "bbb " of Old American Insurance Company (Old American), the group's final expense life insurance subsidiary. The outlook for all ratings is stable. All companies are located in Kansas City, MO.

The ratings reflect the continued strengthening of the group's absolute and risk-adjusted capital positions, solid investment returns and strong statutory profitability. With no long-term debt, an investment portfolio predominately comprised of publicly traded investment grade bonds and access to borrowing facilities at favorable rates, Kansas City Life continues to maintain a strong liquidity profile. Additionally, Kansas City Life's primary distribution strategy of recruiting middle market general agents, along with its secondary distribution strategy focused on marketing agreements with non-life insurance carriers, has facilitated individual life sales growth.

Partially offsetting these positive rating factors are the overall declining trend in premium and deposits, its exposure to interest rate sensitivity due to its fixed deferred annuity balances without surrender charge protection and continued losses from the group insurance segment. In addition, Kansas City Life lacks sufficient scale in its accident and health lines, as well as in its variable life and annuity businesses. A.M. Best notes that, although Kansas City Life has introduced a guaranteed minimum withdrawal benefit for its variable annuity products, earnings from this line are not expected to be material over the near term. Additionally, Old American remains challenged to consistently grow new and renewal premiums, while minimizing the statutory strain from new business in order to ensure long-term capital growth.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.> Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.