Fitch Places Security Benefit on Ratings Watch Negative.

CHICAGO -- Fitch Ratings has placed the ratings of Security Benefit Life Insurance Company (SBLIC) and its affiliate, First Security Benefit Life Insurance and Annuity Company of New York (FSBLIANY) on Rating Watch Negative. The rating action follows today's announcement by Security Benefit Corporation

Rydex is a privately-held asset management company headquartered in Rockville, Maryland. The company reported approximately $14.6 billion under management at Dec. 31, 2006, and manages in excess 80 mutual funds covering a broad assortment of strategies.

While Fitch believes that the acquisition of Rydex makes strategic sense given Security Benefit's focus on the variable annuity and asset management businesses, today's rating action reflects Fitch's concerns regarding the transaction financing and the related adverse effect on Security Benefit's current balance sheet fundamentals.

Fitch expects Security Benefit to fund the proposed acquisition from existing cash and investments in addition to the issuance of debt securities, which is expected to increase Security Benefit's consolidated GAAP financial leverage from an estimated 15.6% at March 31, 2007, to approximately 28% on a pro-forma basis. While still strong, SBLIC's statutory capital position will be weakened significantly by the transaction.

Fitch currently expects to downgrade the IFS ratings on SBLIC and FSBLIANY by one notch to 'A' and affirm SBLIC's 'F1' short-term IFS rating following the close of the transaction.

Security Benefit's existing ratings reflect the company's very strong balance sheet fundamentals, solid competitive position in the 403(b) K-12 market, and modest earnings profile. At year-end 2006, SBLIC reported an NAIC risk-based capital ratio of 743% of company-action level.

Security Benefit's ratings also consider SBLIC's significant revenue exposure to equity market performance, given its large book of variable annuities and its mutual fund operation, and what Fitch considers to be an above average exposure of its fixed annuity block to low interest rates.

Topeka, Kansas-based, Security Benefit Corporation is a financial services organization marketing fixed and variable annuities, mutual funds, various retirement programs and administrative services. The primary operating company, SBLIC, reported statutory admitted assets of $12.1 billion and capital and surplus of $577 million at March 31, 2007.

Fitch places the following ratings on Rating Watch Negative:

Security Benefit Life Insurance Company

--Insurer financial strength 'A+';

--Short-term insurer financial strength 'F1'.

First Security Benefit Life Insurance and Annuity Company of New York

--Insurer financial strength 'A+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.