A.M. Best Affirms Metropolitan Life Rating, Revises Under Review Implications of General American.

OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 26, 1999--

A.M. Best Co. today affirmed the A+ (Superior) financial strength rating of Metropolitan Life Insurance Co. (MetLife), New York.

The rating outlook, however, remains negative, reflecting the company's weak, though improving, sales in its core individual life insurance segment and its below-average operating performance relative to its peers.

The action follows the announcement by MetLife that it has reached a definitive agreement to acquire GenAmerica Corp., an intermediate stock holding company that directly owns General American Life Insurance Co. (General American), for approximately $1.2 billion in cash. The transaction, which has been approved by the boards of both organizations, is expected to close no later than the first quarter of 2000, subject to regulatory approval.

Under the terms of the agreement, the proceeds from the transaction will be placed in escrow. These funds, plus the interest thereon, ultimately will be distributed to General American policyholders, after certain charges, if any, permitted under the definitive agreement are deducted. In addition, as part of the agreement, MetLife will implement a stabilization program designed to resolve General American's difficulty in meeting the liquidity demands arising from its short-term funding agreement business.

A.M. Best believes MetLife's committed credit facilities, the high level of liquidity available within its own $130 billion invested asset portfolio and its substantial financial flexibility--which includes its ability to access various forms of funding through the capital markets--provide more than adequate capacity to satisfy the liquidity needs of the business it is acquiring, in addition to its own needs. A.M. Best also notes that the potential increase in MetLife's leverage position resulting from any financing needed to fund the acquisition, as well as to provide liquidity for the funding agreement business, will fall within the expectations of its present rating.

A.M. Best views the anticipated acquisition favorably, as it will provide MetLife with a strong retail distribution platform in the independent agent market, as well as a controlling interest in a number of well-regarded complementary businesses, including RGA Reinsurance Co.--a significant player in the life reinsurance market. A.M. Best believes the addition of General American's network of 3,000 independent general agents fits well with the organization's strategy to broaden its distribution of individual life and annuities. In addition, the regional broker-dealer and national wirehouse distribution capacity provided by General American's Cova Corp. subsidiaries, significantly enhances MetLife's presence in the financial institution distribution channel. While A.M. Best expects that the level of earnings will improve as a result of the acquisition, the rating agency also believes the organization will remain challenged in the near term to enhance its economic earnings capacity to the levels expected of Superior-rated companies.

The rating agency today also revised the under review status of General American Life Insurance Co. and its subsidiaries to positive from negative. The ratings on the company and its wholly owned subsidiaries remain at B (Fair), while the rating on RGA Reinsurance Co.--its majority-owned affiliate--remains at B++ (Very Good). The rating action reflects the considerable progress made toward the ultimate sale of the company. A.M. Best believes that, following the completion of the acquisition, General American's continuing individual life and annuity operations will benefit substantially from MetLife's financial strength and flexibility. A.M. Best also believes potential synergies exist between the retail operations of both organizations to lower unit costs, reduce the need for future capital investments in infrastructure, and facilitate the expansion of product offerings within General American.

A.M. Best expects an agreement will be reached in September toward resolving General American's short-term funding agreement business. At that time, A.M. Best will re-evaluate the ratings of General American Life and its subsidiaries.

The ratings of the following MetLife affiliates were also affirmed today: the A+ (Superior) rating of Metropolitan Tower Life Insurance Co., Newark, Del.; the A (Excellent) ratings of Metropolitan Insurance & Annuity Co., Newark, Del.; New England Life Insurance Co., Boston, Mass.; Texas Life Insurance Co., Waco, Texas; and Security First Life Insurance Co., Wilmington, Del. The financial performance rating of MetLife Security Insurance Co. of Louisiana, Baton Rouge, FPR 7 (Strong), also is affirmed.

In addition, the under review status was revised to positive from negative on the B (Fair) ratings of General American's wholly owned subsidiaries, Cova Financial Life Insurance Co., Cova Financial Services Life Insurance Co. and First Cova Life Insurance Co., General Life Insurance Co., General Life Insurance Co. of America, Paragon Life Insurance Co. and Security Equity Life Insurance Co.

A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.