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/THIRD ADD -- NY040 -- A.M. BEST ISSUES 490 RATINGS/

 Mutual of America, New York, was assigned a 1993 Best's Rating of "A+" (Superior). The company's superior financial strength was affirmed and its rating level of "A+" was unchanged.
 This rating reflects the company's solid market niche in the not- for-profit, tax-sheltered annuity sector, its favorable operating performance, excellent balance-sheet quality and strong capitalization. Partially offsetting these strengths is the company's recent purchase of a new home office that represents a relatively large investment concentration, its above-average risk to disintermediation and the relatively thinner margin profile of its core business.
 Mutual of America offers a broad range of retirement products to not-for-profit organizations and public sector employees. The company's products are attractive due to their tax-exempt nature and the low production cost characteristics of its distribution, which is conducted through a salaried sales force. The company also maintains a presence in the individual annuity field through its subsidiary, American Life Insurance Company of N.Y. A.M. Best views favorably the diversification which this subsidiary brings to the organization, as its existing flexible premium deferred non-qualified annuities, combined with its expansion into the 401(K) pension field, complement Mutual of America's core business.
 During 1992, Mutual of America completed the purchase of a new home office building, the costs and renovations on which will be funded with borrowed money. This investment accounts for approximately 39 percent of the company's current surplus, excluding the additional cost of renovations. Current plans are for one-third of the building to be used as home office space and the remainder of the space will be leased.
 "A.M. Best remains somewhat concerned that the debt incurred for the purchase and additional costs associated with this facility may constrain capital and put limits on future growth plans," according to Larry G. Mayewski, senior vice president of Best's life/health division. However, these concerns are mitigated by the prime midtown Manhattan location of the building, and the manageable coverage requirements that are associated with the financing of this property. "A.M. Best believes that this investment will provide longer-term value to the company," he said.
 Mutual of America maintains a superior liquidity position and a high-quality investment portfolio that is supported by nearly $4.9 billion in investment-grade bonds, cash and short-term investments (approximately 91 percent of consolidated general account assets). Mutual of America ranks among the 60 largest life/health insurers in the United States when measured by total assets.
 Due to its strategic role as a subsidiary of Mutual of America, American Life Insurance Company of New York, New York, was assigned a 1993 Best's Rating of "A+" (Superior). This rating reflects the consolidated performance of parent and this subsidiary. The activities of this company are principally concentrated in the sale of individual annuities.
 PFL Life Insurance Company, Cedar Rapids, Iowa, was assigned a 1993 Best's Rating of "A" (Excellent). The company's excellent financial strength was affirmed and its rating level of "A" was unchanged.
 This rating reflects PFL Life's profitable earnings performance, excellent balance-sheet quality and favorable capitalization. This rating also acknowledges the support that is received from its ultimate parent, Aegon, N.V. Partially offsetting these strengths are the regulatory uncertainty which surrounds the company's small group accident and health line and the significantly expanded annuity operations in recent years, which subjects the company to an increased level of interest rate risk.
 PFL Life historically has concentrated its activities in the small group major medical and hospitalization field. However, largely as a result of the realignment and consolidation program of the Aegon USA group of life/health insurers, and the associated assumption of business of affiliated carriers, PFL Life has substantially increased its presence in the individual single- and flexible-premium annuity markets over the past two years. A.M. Best views favorably the actions which Aegon USA Inc. has implemented over recent years to realign the businesses of its operating subsidiaries, which are expected to provide for a clearer strategic focus, enhanced operating efficiencies and greater profitability in the future.
 "The company maintains an excellent liquidity position, when related to its overall liability structure," said Larry G. Mayewski, senior vice president of Best's life/health division. In addition, "A.M. Best believes that the small contract size, diverse distribution sources and focus on asset/liability management provide some insulation from interest rate risks that are associated with the growth of the company's annuity writings," he added.
 At year-end 1992, PFL Life held over $3 billion in investment-grade bonds, cash and short-term investments (78 percent of invested assets). The company maintains a modest exposure to commercial mortgage loans, and the performance of these investments has remained very favorable. Total problem mortgages (including restructured loans) comprised less than 1 percent of general account assets at year end. PFL Life Insurance Company ranks among the 70 largest life/health insurers in the U.S. when measured by total assets.
 Reliance Insurance Group, Philadelphia, was assigned a 1993 Best's Rating of "A-" (Excellent). The group's excellent financial strength was affirmed and its rating level of "A-" was unchanged. This rating applies to the Reliance Insurance Group's six intercompany pool members and an affiliate that fully reinsures with a pool member, as well as the Reliance Insurance of New York Group's two intercompany pool members.
 "This rating reflects the expected improvement over the past twelve months in the group's capitalization and asset quality, as well as its focus on its more profitable commercial specialty business," said John H. Snyder, senior vice president of Best's property/casualty division. "In addition, the group is planning to take several capital actions at the parent holding company level to reduce debt and refinance debt at more favorable terms that will reduce future dividend demands on the insurance companies," he added.
 Affirmation of Reliance's rating follows a series of meetings held with management over the past year focusing on its execution of a number of corrective steps undertaken during 1992 to significantly improve the quality of its capital within the insurance group. "Over the last 12 months, affiliated investments have been dramatically reduced, from $1.0 billion at year-end 1991 to a pro-forma balance of $0.4 billion at year-end 1992, with the proceeds being reinvested in high-quality, liquid assets to support the group's underwriting activities," Mr. Snyder said. "This reduction in affiliated investments follows the sale of several non-core businesses, including insurance broker, Frank B. Hall Inc. in November 1992 and the pending sale of United Pacific Life Insurance Company (UPL), expected to close in July 1993," he added.
 In addition, the group continued to reduce the level of below investment-grade bond holdings from a high of 40 percent of surplus in 1990 to a more reasonable 20 percent of surplus at year-end 1992. Finally the group's parent holding company, Reliance Group Holdings, is committed to reducing the significant financial leverage maintained by the parent which will considerably reduce future dividends required from the insurance companies to service the debt. This will be accomplished by both equity and debt refinancing initiatives that Best expects will be completed in the fourth quarter of 1993 and will reduce overall debt levels, as well as refinance long-term debt, at more favorable interest rates.
 These positive rating factors, however, are partially offset by the group's aggressive investment position, despite its corrective action, with remaining investments in affiliates, an equity portfolio with a number of concentrated holdings, and below investment-grade bond holdings which combine to represent approximately 150 percent of surplus. In addition, significant financial leverage exists at the parent holding company, with aggregate debt over $1.0 billion, $350 million of which is coming due in 1993 and 1994.
 Reliance's underwriting results, with an average combined ratio of 111 in the past five years, have been stable, reflective of its profitable national accounts and commercial specialty business underwritten by the Reliance National Division, but have been largely offset by its unfavorable standard commercial business results, and adverse loss reserve development on its problematic workers' compensation line. The group's higher than average gross underwriting leverage is tempered by its retrospectively rated national accounts business, its use of highly rated reinsurers and strong collateral maintained for reinsurance recoverables. Reliance's emphasis on profitable commercial specialty business, (over one-half of writings) its balance sheet strengthening, and Reliance Group Holding's refinancing goals should have long-term positive implications on the insurer. Reliance ranks among the 40 largest property/casualty underwriters in the country with $1.5 billion of net premiums supported by $860 million of 1992 year-end surplus. A.M. Best estimates Reliance's pro forma surplus at nearly $930 million at March 31, 1993, after giving effect for the sale of UPL.
 -0- 6/28/93 AC NY040
 /PRNewswire -- June 28/
 /FOURTH AND FINAL ADD -- NY040D -- TO FOLLOW/


CO: ST: IN: INS SU: RTG

TS -- NY040C -- 6237 06/28/93 12:26 EDT
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Date:Jun 28, 1993
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