Insurers National Life, MetLife Investors, and Integrity Life
Downgraded by Weiss Ratings

26 Life and Health Insurers Downgraded; 30 Upgraded in Recent Review

PALM BEACH GARDENS, Fla., September 2, 2003 - National Life Insurance Company, MetLife Investors Insurance Company, and Integrity Life Insurance Company were among 26 companies downgraded by Weiss Ratings, Inc., in its recent review of 955 life and health insurers based on first-quarter 2003 data. A total of 30 companies, including Penn Insurance & Annuity Company, Health Net Life Insurance Company, and Wellmark of South Dakota, Inc., received upgrades by Weiss Ratings, the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

National Life Insurance Company (Montpelier, Vt.) was downgraded to C+ (Fair) from B- (Good) due to a decline in profitability and deterioration in the company's capital position. Net income fell $16.6 million, or 158.1 percent, from a $10.5 million profit in the first quarter of 2002 to a $6.1 million loss in the first quarter of 2003. The decline was driven by a $301.1 million, or 214.3 percent, increase in paid claims, which jumped from $140.5 million to $441.6 million during the same period. As a result, operating gain decreased by $11.7 million, or 28.7 percent, from $40.7 million in 2002 to $29 million in the first three months of 2003. Return-on-equity plummeted 170 percent to a negative 6.6 percent compared to 9.4 percent. Likewise, capital and surplus declined $77.7 million, or 17.3 percent, from $448.5 million at March 31, 2002 to $370.8 million at March 31, 2003. This resulted in a decline in the company's risk-adjusted capital ratio, which fell to 1.03 compared to a ratio of 1.33 at first quarter 2002.

MetLife Investors Insurance Company (Oakbrook Terrace, Ill.) was downgraded to C+ (Fair) from B- (Good) based upon a decline in profitability and the resulting deterioration in its capital position. MetLife Investors' operating margin fell to 0.2 percent at March 31, 2003 compared to 9.4 percent at March 31, 2002. Contributing to this decline was a $50.4 million, or 39.7 percent, increase in paid claims, which climbed from $126.9 million in first quarter 2002 to $177.3 million in first quarter 2003. This led to $14.6 million loss compared to a $3.4 million profit one year earlier. The decrease in earnings weakened the company's capital position, which dropped from $166.4 million at March 31, 2002 to $141.8 million at March 31, 2003. As a result, return-on-equity fell to a negative 41.2 percent compared to 8.2 percent one year earlier.

Integrity Life Insurance Company (Louisville, Ky.) was downgraded to D+ (Weak) from C- (Fair) due to a weakened capital position. Premium revenue plunged $63.9 million, or 38.7 percent, from $165.3 million in first quarter 2002 to $101.4 million in first quarter 2003. Investment income also declined, falling from $29.7 million to $23.9 million during the same period. Likewise, capital and surplus decreased $29.8 million, or 15.9 percent, from $187.9 million at March 31, 2002 to $158.1 million at March 31, 2003. This resulted in a decline in the company's risk-adjusted capital ratio, which fell to 0.86 compared to a ratio of 1.29 one year ago.

30 Companies Receive Weiss Safety Rating Upgrades

Penn Insurance & Annuity Company (Wilmington, Del.) was upgraded to B (Good) from C+ (Fair) due to improved profitability over the last two years. The company's net income increased $3.3 million, or 94.3 percent, from $3.5 million in the first quarter of 2001 to $6.8 million in the first quarter of 2003. The increase in net income was driven by a $4 million, or 10.6 percent, decline in paid claims, which fell from $37.6 million to $33.6 million during this same period. The company's operating gain rose $4.3 million, from $4.6 million to $8.9 million during the same two-year period. As a result, return-on-equity increased 93.7 percent, from 12.7 percent to 24.6 percent.

Health Net Life Insurance Company (Pueblo, Colo.) was upgraded to B- (Good) from C (Fair) based on improved profitability and improvement in its capital position. Premium income increased $37 million, or 36.6 percent, from $101.2 million in the first quarter of 2002 to $138.2 million in the first quarter of 2003. The rise in premiums led to a $3.1 million, or 147.6 percent, increase in net income, from a $2.1 million loss in first quarter 2001 to a $1 million profit in first quarter 2003. Likewise, return-on-equity improved significantly during this period, from a negative 32.6 percent to 2.8 percent. The company's capital position also improved, with capital and surplus increasing $63.5 million, or 80.3 percent, from $79.1 million at March 31, 2002 to $142.6 million at March 31, 2003. Consequently, Health Net's risk-adjusted capital ratio rose from 1.91 in 2002 to 2.28 at the end of the first quarter 2003.

Wellmark of South Dakota, Inc. (Sioux Falls, S.D.) was upgraded to B- (Good) from C+ (Fair) due to improved profitability. Net income surged 170 percent, from $1 million in first quarter 2002 to $2.7 million in first quarter 2003. It reported a $2.1 million, or 161.5 percent, increase in operating gain before dividend payouts, taxes, and capital gains, earning $3.4 million compared to $1.3 million last year. The company's operating margin improved to 4.2 percent compared to 2 percent. Likewise, Wellmark's return-on-equity jumped from 9.4 percent in 2002 to 24 percent in the first quarter 2003.

Weiss Ratings issues safety ratings on more than 15,000 financial institutions, including HMOs, life and health insurers, Blue Cross Blue Shield plans, property and casualty insurers, banks and brokers. Weiss also rates the risk-adjusted performance of more than 12,000 mutual funds and more than 8,000 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 the Weiss Ratings website at www.WeissRatings.com, or starting at $15 by calling 800-289-9222.


15430 Endeavour Drive, Jupiter, FL 33478 · (561) 627-3300 · www.weissratings.com


Note to Editors: National and state-specific tables of strongest and weakest life, health, and annuity insurers are available. To read the companion release, "Life and Health Insurers' Profits Plunge 38% in First Quarter 2003," click here.