WEISS RATINGS

Life and Health Insurers' Profits Plunge 61% in
First Nine Months of 2002, Lowest Level in Decade
Industry Posts $9.6 Billion Capital Loss

PALM BEACH GARDENS, Fla., February 26, 2003 - With the economy at a standstill, profits of the nation's life and health insurers fell $5.3 billion, or 61.2 percent, to $3.4 billion in the first nine 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. Industry profitability for the nine-month period reached its lowest level in 10 years as illustrated:

Driving the decline in industry earnings during the first three quarters was a staggering $9.6 billion capital loss on the sale of investments, compared to a $3.3 billion loss for the same period in 2001. Of the life and health insurers reporting a capital gain or loss, 71 percent posted capital losses as a result of the market's dismal performance.

"Investments are an intrinsic part of the industry's ability to maintain adequate reserves in order to deliver long-term policy commitments. Substantial portfolio losses over time force companies to compensate in other ways," said Melissa Gannon, vice president of Weiss Ratings, Inc. "In particular, companies are forced to dip into their capital cushion to maintain reserves since they cannot rely on investment appreciation to do so."

Life and health insurance companies reporting the largest year-over-year increases in capital losses were:

Company Headquarters Weiss
Safety
Rating
Capital Gains
(Loss) ($Mil)

3rd Qtr
2002
3rd Qtr
2001
$
Change
%
Change
Northwestern Mutual Life Ins. Co. Milwaukee, Wis. A -410.5 288.9 -699.4 -242.1
Metropolitan Life Ins. Co. New York, N.Y. B+ -911.3 -375.8 -535.5 -142.5
Teachers Ins. & Annuity Assoc. New York, N.Y. A+ -429.7 -74.1 -355.6 -480.2
United Ins. Co. of America Chicago, Ill. A- -0.8 329.8 -329.9 -100.0
Travelers Ins. Co. Life Dept. Hartford, Conn. B -340.4 -59.9 -280.5 -468.7
Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

Insurers with capital losses representing the greatest impact to capital and surplus include:

Company Headquarters Weiss
Safety
Rating
Capital
Loss
($Mil)
Capital
and
Surplus
($Mil)
As a % of
Capital
and
Surplus
Presidential Life Ins. Co. Nyack, N.Y. D 115.7 165.6 69.8
Il Annuity & Ins. Co. Topeka, Kan. D 21.0 33.7 62.1
Penn Treaty Network America Ins. Co. Allentown, Pa. D- 6.6 12.1 54.9
Conseco Health Ins. Co. Carmel, Ind. E 46.1 102.4 45.1
Union Bankers Ins. Co. Dallas, Texas D+ 2.6 7.4 35.8
Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

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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