WEISS RATINGS

Life and Health Insurers Suffer 59% Profit Decline
During First Half of 2002
Industry Records $6.5 Billion Capital Loss

PALM BEACH GARDENS, Fla., January 8, 2003 - Profits of the nation's life and health insurers plunged $4.9 billion, or 59.2 percent, during the first six months of 2002, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

The industry recorded its largest capital loss ever for the six-month period, $6.5 billion, compared to a $2.2 billion loss for the same period in 2001, thus driving the steep overall profit decline. Vulnerable life and health insurers (those rated D+ or lower by Weiss) reporting the largest capital losses were:

Company Domicile
State
Weiss
Safety
Rating
Realized Capital Gains
(Loss) ($Mil)

2nd Qtr
2002
2nd Qtr
2001
$
Change
Life Insurance Company of North America Pa. D+ (46.8) (5.2) (41.6)
Conseco Annuity Assurance Company Ill. E (30.5) 29.7 (60.2)
IL Annuity & Insurance Company Kan. D+ (30.3) (11.0) (19.3)
Bankers Life & Casualty Company Ill. E (21.7) (0.4) (21.3)
Allmerica Financial Life & Annuity Del. D+ (15.2) (0.7) (14.5)
Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

"Insurers' investment portfolios have been hard hit with massive write-offs during this bear market, making fundamentally weak companies more vulnerable," commented Melissa Gannon, vice president of Weiss Ratings, Inc. "Regardless of the economy, policyholders should always consider financial strength a critical factor in selecting an insurer."

Industry Capital & Surplus Declines

The continuing decline in the equities market produced an $8.6 billion unrealized loss for the industry, causing capital and surplus to decline 3.7 percent, from $235.1 billion as of June 30, 2001, to $226.4 billion at June 30, 2002. Vulnerable life and health insurers (those rated D+ or lower by Weiss) reporting the largest declines in capital and surplus were:

Company Domicile
State
Weiss
Safety
Rating
Capital & Surplus ($Mil)
2nd Qtr
2002
2nd Qtr
2001
$
Change
%
Change
Allmerica Financial Life & Annuity Del. D+ 102.8 323.4 (220.6) (68.0)
Washington National Ins. Co. Ill. E 185.1 353.5 (168.4) (48.0)
Conseco Annuity Assurance Co. Ill. E 279.7 397.3 (117.6) (30.0)
First Allmerica Financial Life Ins. Mass. D+ 387.4 496.5 (109.1) (22.0)
Great Southern Life Ins. Co. Texas D+ 74.3 182.2 (107.9) (59.0)
Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

""The reduction to capital and surplus indicates the toll that investment losses have had on the industry," said Ms. Gannon. "Consumers should anticipate additional rate increases as insurers build up their capital."

Notable Upgrades and Downgrades

Among the 984 insurers recently reviewed by Weiss, 29 companies were upgraded and 46 were downgraded. Notable upgrades include:

• American Health & Life Insurance Co. (Texas) from B to B+
• Tennessee Farmers Life Insurance Co. (Tenn.) from B+ to A-
• Unicare Life & Health Insurance Co. (Del.) from B- to B

Notable downgrades include:

• Allmerica Financial Life & Annuity (Del.) from C to D+
• Connecticut General Life Insurance Co. (Conn.) from C+ to C-
• Conseco Annuity Assurance Co. (Ill.) from E+ to E

The Weiss Safety Ratings are based on an analysis of a company's risk-adjusted 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 more than 15,000 financial institutions, including insurance companies, banks, and brokerage firms. Weiss also rates the risk-adjusted performance of more than 11,000 mutual funds and more than 7,000 stocks. 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, businesses, and libraries.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $7.95 through www.WeissRatings.com, or starting at $15 by calling 800-289-9222.


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