WEISS RATINGS

Life and Health Insurers Enjoy 14% Increase in First Quarter Profits
Some Companies Significantly Increase Common Stock Holdings

PALM BEACH GARDENS, Fla., September 10, 1998 — The nation's life and health insurers reported a $5.7 billion net profit during the first quarter of 1998, representing a 14.4% increase from the first quarter 1997, with 51% of the companies showing profit increases, according to Weiss Ratings, Inc., the only independent provider of insurance company ratings and analysis.

In view of recent stock market volatility, Weiss also reviewed the year-to-year common stock holdings of life and health insurers. While the overall industry's common stock holdings appreciated in line with the stock market, many companies' holdings noticeably surpassed the market's gains during 1997.

Companies whose common stock holdings increased more than the overall market during 1997 include: Jackson National Life Insurance Company (up 160% to $92 million); Transamerica Life Insurance and Annuity Company (up 98% to $105 million); Mutual of America Life Insurance Company (up 175% to $399 million); National Life Insurance Company (up 182% to $34 million); and Bankers Life and Casualty Company (up 196% to $32 million).

Heavier investments in the stock market may turn out to be imprudent, especially in view of life and health insurers' long-term obligations to policyholders," commented Martin Weiss, Ph.D., chairman of Weiss Ratings, Inc. "However, for most companies, the exposure has not reached a dangerous level."

Noteworthy Upgrades and Downgrades

Among the 1,157 company ratings reviewed by Weiss, 21 companies received upgrades and 33 downgrades.

Notable upgrades include:
Company Previous
Rating
New
Rating
Great-West Life & Annuity Insurance Company (Engelwood, Colo.) B+ A-
Nationwide Life Insurance Company (Columbus, Ohio) B+ A-
Principal Life Insurance Company (Des Moines, Iowa) B+ A-
Notable downgrades include:
Company Previous
Rating
New
Rating
Security Life of Denver Insurance Company (Denver, Colo.) A- B+
Pan-American Life Insurance Company (New Orleans, La.) B- C+
United Presidential Life Insurance Company (Carmel, Ind.) B- C+

Capital and Surplus Growth Rate Increases

Due to growing profits, life and health insurers enjoyed a strong 15.8% increase in capital and surplus -- from $164 billion at March 31, 1997, to nearly $190 billion at March 31, 1998. This increase is notably higher than the 10.5% recorded from first quarter 1996 to first quarter 1997.

On a cautionary note, however, Weiss cites that a growing amount of this capital -- $9.7 billion now versus $8.7 billion a year ago -- is in "surplus notes," a form of subordinated debt that the regulators count as capital.

Repossessed Real Estate Declines

Repossessed real estate declined by $2.9 billion, or nearly 40%, from first quarter 1997 levels. This troubled asset category now represents only 2.3% of capital versus 4.4% at March 31, 1997.

Weiss' ratings are based on an analysis of a company's capital, five-year historical profitability, quality of investments, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies, and risk diversification.

Weiss issues safety ratings on over 16,000 financial institutions, including HMOs, life and health insurers, Blue Cross/Blue Shield plans, property and casualty insurers, banks and brokers. Weiss Ratings is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers and businesses.

Consumers who need more information on the financial safety of a specific company may purchase a rating or analysis directly from Weiss for as little as $15 by calling 1-800-289-9222. Weiss Safety Ratings are also available at many local libraries or through insurance agents.


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