AM Best


A.M. Best Upgrades and Assigns Ratings to Guaranty Income Life Insurance Company; Revises Outlook to Stable


CONTACTS:


Analyst(s)

Robert Stewart

(908) 439-2200, ext. 5232

robert.stewart@ambest.com

Joseph Zazzera

(908) 439-2200, ext. 5797

joseph.zazzera@ambest.com

Public Relations

Jim Peavy

(908) 439-2200, ext. 5644

james.peavy@ambest.com

Rachelle Morrow

(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK, N.J. - JULY 26, 2007 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating (FSR) to B+ (Good) from B (Fair) and has assigned an issuer credit rating (ICR) of "bbb-" to Guaranty Income Life Insurance Company (Guaranty Income) (Baton Rouge, LA). The outlook for the FSR has been revised to stable from positive, and the outlook assigned to the ICR is stable.

The ratings reflect Guaranty Income's strengthened absolute and risk-adjusted capital positions due to improved earnings and the support of its parent, the reduction of leverage at the parent company and the improvement in the spreads earned on its annuity products. The improvement in the reduction of leverage at the parent was accomplished primarily through cash received from divestitures of non-core investment subsidiaries previously owned by the parent.

With the strengthened capital level and improvement in spreads, Guaranty Income is forecasting a modest increase in future annuity sales. A.M. Best will be monitoring Guaranty Income's projections for premium growth and its ability to expand its direct and net premium base on a profitable basis. Going forward, the company will need to continue to effectively manage its spreads in order to maintain its favorable positive operating result trend. A.M. Best believes Guaranty Income will continue to be challenged to meet premium and earnings projections due to the competitive annuity marketplace.

In addition, Guaranty Income will need to organically grow its capital through retained earnings to alleviate statutory surplus strain as it expands its annuity sales in the coming years. A.M. Best will continue to monitor Guaranty Income's asset and liability duration management to ensure appropriate matching.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.

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AMB# Company Name
006504 Guaranty Income Life Insurance Company