A.M. Best Affirms Ratings of The Empire Life Insurance Company

    OLDWICK, N.J., June 15 /CNW/ - A.M. Best Co. has affirmed the financial
strength rating of A (Excellent) and issuer credit rating (ICR) of "a" of The
Empire Life Insurance Company (Empire Life) (Kingston, Ontario, Canada). The
outlook for both ratings is stable.

    The ratings of Empire Life reflect its excellent capitalization,
continued strong growth in segregated assets, consistent profitability and
expanding distribution. Empire Life has generated improved levels of
profitability in recent years, including the favorable impact of lower reserve
strengthening in 2006, which contributed to a 75% increase in net income
relative to 2005. This was partially offset by new business strain from strong
sales in its wealth management and individual insurance segments. Segregated
fund sales continue to be strong due to favorable markets and productivity
from its expanding distribution network. This profitability has enabled Empire
Life to maintain favorable capitalization measures, giving it the platform to
expand its existing operations.

    Offsetting these strengths are the challenges Empire Life faces in
continuing to improve earnings within its group and individual insurance
segments, growing exposure to equity market performance and the ability to
expand its core businesses in the Canadian life insurance market that is
dominated by larger competitors. This is a concern, especially within the
group insurance segment, where A.M. Best believes Empire Life will be
challenged to improve earnings and market share against competitors that have
the scale to make the significant technology investments required to compete
effectively in group insurance. Empire Life's earnings and capital growth have
become increasingly dependent on equity market performance, as growth in both
capital and assets under management have been positively impacted by favorable
domestic markets.

    For Best's Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.

    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.

For further information:

For further information: A.M. Best Co. Analysts: Richard McMillan,
908-439-2200, ext. 5615 richard.mcmillan@ambest.com Stephanie Guethlein
McElroy, 908-439-2200, ext. 5128 stephanie.mcelroy@ambest.com or Public
Relations: Jim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com Rachelle
Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com

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