A.M. Best Downgrades Ratings of Beneficial Life Insurance Company

Business Wire, June 17, 2009

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and issuer credit rating to “a-” from “a” of Beneficial Life Insurance Company (Beneficial Life) (Salt Lake City, UT). The outlook for both ratings is negative.

The rating downgrades recognize Beneficial Life’s decision to downsize its life insurance and annuity lines of business and discontinue issuing new policies on October 31, 2009. The Company also has substantial interest rate and credit risk resulting from above-average exposure to structured securities and a large book of interest sensitive liabilities.

In recent years, Beneficial Life has reduced its exposure to structured securities. Over the past two years, the Company has also prudently recognized asset impairments which resulted in a major reduction to statutory capital. However, its parent, Deseret Management Corporation (DMC), has made very substantial capital contributions which fully replenished Beneficial’s capital levels. The Company currently has a very strong risk-adjusted capital ratio and an above industry average of capital and surplus to liability ratio.

The negative outlook reflects the current, overall economic uncertainty and volatile investment climate for the industry as well as the potential for increased lapse activity. While the Company will be placed into run-off, Beneficial Life is in serious negotiations with several high quality insurance carriers to provide support for its current distribution channel. The impact to its current insurance block remains uncertain; however, the company has taken steps to provide economic incentives to the distribution channel to reduce the likelihood of increased replacement activity.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/methodology.

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.