A.M. Best Downgrades Debt Rating on Insured Notes of FLAC Holdings, LLC

Business Wire, Feb 26, 2008

OLDWICK, N.J. -- A.M. Best Co. has downgraded the debt rating to "a-" from "a" of the $134 million floating rate insured notes (the notes), due December 15, 2018, issued by FLAC Holdings, LLC (FLAC Holdings) (New York NY). The rating remains under review with negative implications.

A.M. Best's rating takes into consideration the following factors: the financial strength rating of Forethought Life Assurance Company (FLAC) (Batesville, IN); the stand-alone rating of the notes (i.e. rating of the notes without the support of the financial guarantor); a review of the actuarial assumptions and their impact on the collateral cash flow; an analysis of the deal model cash flow projections including stress testing of key risk factors, interest rate and investment conditions; and a review of the structure, legal documentation and regulatory environment. In addition, A.M. Best considers the payment assurance provided by XL Capital Assurance Inc. (XLCA), a financial guarantor and operating subsidiary of Security Capital Assurance Limited (SCA) (Bermuda).

The rating downgrade is solely due to A.M. Best's concerns regarding financial pressures and continued uncertainty currently being experienced by SCA in executing its capital remediation plans and the change in credit profile of XL Capital Group (XL Capital) (Cayman Islands), which provides substantial reinsurance support to SCA's operating subsidiaries and guarantees certain SCA obligations.

For access to special reports, analytical methodologies and transactions relating to structured finance, please visit http://www3.ambest.com/sfc/.> 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.