S&P Affirms Ratings on Security Benefit Life Ins Co Unit

    NEW YORK, Dec. 7 /PRNewswire/ -- Standard & Poor's today affirmed its
 ratings on Security Benefit Life Insurance Co. and First Security Benefit Life
 Insurance and Annuity Co. of NY., collectively, Security Benefit Life (see
 list below), the major life insurance and annuity entities in the Security
 Benefit group of companies.
     The outlook is stable.
     The rating affirmations reflect Security Benefit Life's very strong
 position in the tax-sheltered annuity market, its very strong operating
 performance, its extremely strong capitalization, and its improved asset and
 liability risk profile. Partially offsetting these strengths are the
 challenges the company faces in diversifying its business profile and managing
 its level of liquidity.
     Major Rating Factors:
     -- Security Benefit Life has a very strong business profile due to its
 well-established position in the tax-sheltered annuity market, specifically in
 the retail 403(b) market segment. The insurer holds a top-10 market share
 position in the K-12 public school market segment. As a result of its large
 percentage of qualified variable annuity business, its longstanding
 distribution relationships, and its target market, the company is less
 sensitive to interest rate risk compared with other annuity companies.
 Security Benefit Life's solid business position is sustainable because the
 high barriers of entering the 403(b) market somewhat restrict increased
 competition.  The company's core annuity retail sales increased 28% through
 Sept. 30, 1999, due to improved agent productivity and an increase in
 distribution capacity.
     -- Although Security Benefit Life maintains a very strong business
 position in the tax-sheltered annuity market, the company's operational
 profile is concentrated because 100% of its policy reserves are annuities.
 Diversification is achieved through revenues generated by Security Management
 Co. LLC, with customer accounts and assets in mutual fund products.
     -- Standard & Poor's views Security Benefit Life's operating performance
 as very strong, as measured by Standard & Poor's earnings adequacy ratio of
 316% at Dec. 31, 1998, and GAAP return on assets (ROA) of 81 basis points
 through Sept. 30, 1999. Security Benefit Life's consistently strong annuity
 earnings profile is supported by its increasing asset base, its low-cost
 structure, and its good expense control.
     -- Standard & Poor's believes Security Benefit Life's capitalization is
 extremely strong, as measured by Standard & Poor's capital adequacy ratio of
 466% at Dec. 31, 1998. Capitalization is expected to fall but will remain
 within the extremely strong area due to strategic initiatives focused on
 further improving the company's business profile.
     -- Security Benefit Life's investment portfolio is very strong from a
 credit quality and risk-return standpoint. The company's investment portfolio
 consists of high-quality, fixed-income securities. Its below-investment-grade
 holdings are 8% of invested assets, and Standard & Poor's believes Security
 Benefit Life will maintain this level for the next few years. In recent years,
 the company has reduced its mortgage-backed securities holdings to less than
 20%, with current cash flow invested in high-grade corporate and asset-backed
 securities.
     -- Security Benefit Life's liquidity is good, as measured by Standard &
 Poor's liquidity ratio of 156%, the strong persistency of its annuity
 liabilities, and the company's extremely strong capitalization. Although
 liquidity is considered good, Security Benefit Life remains challenged in
 managing its liquidity due to its growth in variable rate funding agreements
 and high percentage of annuity reserves without surrender charges.
     Security Benefit Life is a Security Circle insurer, which means that it
 voluntarily underwent Standard & Poor's most comprehensive analysis and was
 assigned a rating in the top four categories for financial security.
     OUTLOOK: STABLE
     Standard & Poor's believes Security Benefit Life will be able to sustain
 its GAAP earnings adequacy ratio in the 300% area due to its increasing asset
 base and expense control management. Core retail annuity sales are expected to
 increase 6%-8%, while assets under management are expected to increase
 8% based on variable asset growth. Institutional liabilities are expected to
 remain below 20% of general account liabilities, and capitalization is
 expected to remain extremely strong, Standard & Poor's said. -- CreditWire
 
     RATINGS AFFIRMED
                                                          RATINGS
 
     Security Benefit Life Insurance Co.
       Counterparty credit rating                          AA-/A-1+
       Financial strength rating                           AA-/A-1+
       Surplus notes                                       A
 
     First Security Benefit Life Insurance and Annuity Co. of NY
       Financial strength rating                           AA-
 
 

SOURCE Standard & Poor's

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