WEISS RATINGS

Life and Health Insurers' Profits Decline 53% in 2002
$689 Million Lost in Individual Annuity Business

PALM BEACH GARDENS, Fla., June 24, 2003 - The nation's life and health insurers experienced a 52.6 percent decline in net income during 2002, earning $7.3 billion compared to $15.4 billion in 2001, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

The continuing downturn in the equity market was responsible for the industry's profit decline as insurers suffered a staggering $15.5 billion capital loss on the sale of invested assets, on top of a $4.4 billion capital loss in 2001. Insurers whose capital losses had the greatest impact on capital and surplus include:

Company Headquarters Weiss
Safety
Rating
Realized Losses
on Invested Assets

Capital and
Surplus at
1/1/021
($Mil)
Thru
12/31/02
($Mil)
As a % of
Capital
and
Surplus
Bankers National Life Ins. Co. Carmel, Ind. E 124.9 100.5 80.5
Presidential Life Ins. Co. Nyack, N.Y. D 304.6 110.3 36.2
Conseco Annuity Assurance Co. Carmel, Ind. E 378.7 119.7 31.6
Nationwide Life Ins. Co of America Philadelphia, Pa. B- 574.1 101.9 17.8
Prudential Ins. Co. of America Newark, N.J. B- 8,767.2 1,196.4 13.7
Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

"Insurers continue to get beaten up by the equity markets, and we expect to see more of the same when early 2003 data come in," commented Melissa Gannon, vice president of Weiss Ratings, Inc. "These losses impact the industry's ability to maintain adequate reserves and consequently drive rate increases."

Individual Annuities Register $689 Million Loss; Group Health and Group Annuity Profits Surge

In analyzing line of business results of life and health insurers, Weiss found that individual annuities, the industry's second largest product line after individual life, was the only line of business to report a loss for the year. The industry lost $689.2 million on individual annuities in 2002, compared to a $1.8 billion profit in 2001.

Life and health insurers reporting the largest declines in individual annuity income include:

Company Headquarters Weiss
Safety
Rating
Gain (Loss) on
Individual Annuities ($Mil)

12/31/01 12/31/02 $
Change
Metlife Investors USA Ins. Co. Los Angeles, Calif. B- (30.0) (1,085.4) (1,055.4)
Allianz Life Ins. Co. of N. America Minneapolis, Minn. C+ 147.5 (121.0) (268.5)
Axa Corporate Solutions Life Reins New York, N.Y. C 6.0 (201.2) (207.2)
Merrill Lynch Life Ins. Co. Princeton, N.J. C+ (4.1) (129.0) (124.9)
Clarica Life Ins. Co. US Branch Ontario, Can. C+ (38.5) (161.8) (123.3)
Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

In contrast, group health and group annuity products experienced the largest increase in profits. Group health profits surged 133 percent, from $885.2 million in 2001 to $2.1 billion in 2002, while group annuity income jumped 111 percent, from $2.1 billion to $4.5 billion during the same period.

"Individual annuities have been hit particularly hard - declining asset values have led to a significant decline in fee income, guaranteed minimum death benefits are forcing companies to pay claims higher than the value of the contract, and sales have dropped," added Ms. Gannon.

Insurers' Junk Bond Holdings Increase 27 Percent

With the slow economy triggering more bond defaults as well as a general decline in bond ratings, life and health insurers' junk bond portfolios rose $31.6 billion, or 27 percent, to $148.9 billion at December 31, 2002, compared to $117.3 billion at year-end 2001.

Life and health insurers reporting the largest increase in junk bond holdings include:

Company Headquarters Weiss
Safety
Rating
2002
Increase in
Junk Bonds
($Mil)
Junk Bonds as % of
Invested Assets

12/31/01 12/31/02
Berkshire Hathaway Life Ins. Omaha, Neb. B 447.1 0.0 25.3
ING Life Ins. Co. of America Hartford, Conn. C- 852.7 0.8 15.4
Protective Life Ins. Co. Birmingham, Ala. C+ 544.1 3.8 9.0
Provident Life & Accident Ins. Co. Chattanooga, Tenn. C- 302.1 14.1 18.5
Primerica Life Ins. Co. Duluth, Ga. B+ 191.5 2.1 6.3
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 12,000 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.


1 Asset Valuation Reserve (AVR) is included with capital and surplus figure.


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