S&P Affirms Banner Life Insurance Co. `BBBpi' Rating.

Business Editors

NEW YORK--(BUSINESS WIRE)--Standard & Poor's

March 22, 2001--Standard & Poor's today affirmed its triple-'Bpi' financial strength rating on Banner Life Insurance Co. (Banner Life).

The rating is based on sustained financial support from the

The company's major line of business is ordinary life insurance, sold through independent agents. Banner Life is licensed in all U.S. states (except New York) and the District of Columbia. Its subsidiary, William Penn Life Insurance Co. of NY, writes policies for New York and four other states.

Originally chartered in 1949 as Government Employees Life Insurance Co., Banner Life was acquired by Legal & General as a wholly owned subsidiary in 1981. The name was changed in 1983.

Legal & General is a major financial services provider focusing on life insurance, pension, savings, and protection policies for individuals.

Major Rating Factors:

-- Standard & Poor's views the company's relationship with Legal & General as a
positive one, by virtue of the latter's capital contributions to its subsidiary
of $55 million in 1999 and $50 million in 2000. Further contributions are
expected to support current levels of premium growth.

-- The company has demonstrated extremely strong liquidity, as indicated by a
liquidity ratio in excess of 300%. The vast majority of the investment
portfolio is in investment-grade bonds, with the fixed-income portion
representing 83% of invested assets overall.

-- The company (NAIC:94250) underwent a $47.7 million loss in 1999, following a
$2.6 million loss in 1998, and this trend has continued into 2000 with
additional significant losses. The five-year average return on assets is less
than 1%.

-- The currently high level of losses, however, can be primarily attributed to
new business strain. Net premiums grew by 67% in 1999 to $127.0 million, from
$76.1 million in 1998. This growth is having a negative impact on the company's
immediate operating results.

-- Surplus levels rose in 1998 and 1999 in spite of losses, due to the parent's
capital contribution, which was used to offset the surplus strain from new
business. Total adjusted capital for year-end 1999 was $195.5 million.

Ratings with a 'pi' subscript are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings.

Ratings with a 'pi' subscript generally are not modified with "plus" or "minus" designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said. --CreditWire.