A.M. Best Affirms Ratings of Great-West; Assigns Issuer Credit Ratings to Subsidiaries.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit rating (ICR) of "aa" of Great-West Life Assurance Company (GWL) (Winnipeg, Manitoba). A.M. Best has also affirmed the FSR of A+ (Superior) and assigned an ICR of "aa" to Great-West Life & Annuity Insurance Company (GWL&A) (Greenwood Village, CO). Concurrently, A.M. Best has affirmed the ICR of "a+" of the parent company, Great-West Lifeco, Inc. (Great-West) and all debt ratings issued by Great-West and its subsidiaries. The outlook for all ratings is stable. (See link below for a detailed listing of all ratings.)

These rating affirmations are based on Great-West's operating companies' very strong operating fundamentals, including excellent risk-adjusted capitalization and superior financial performance, significant and sustainable scale advantages in core business lines in Canada and strong investment management capabilities. The ratings also consider Great-West's consolidated position as a market leader in the Canadian individual and group areas, with superior market positions in both the protection and wealth accumulation segments, solid earnings contribution from its U.S. operations and further geographic diversification arising from continued expansion in its international business segment.

Organic growth, along with significant acquisitions in Canada, has led to strong and sustainable earnings growth. Given Great-West's Canadian market position, pricing discipline and low expense structure, A.M. Best expects to see continued earnings growth and superior shareholder returns. Moreover, the Canadian distribution systems of GWL and its subsidiaries represent Canada's largest and serve as a major strength and competitive advantage for the company.

In the United States, GWL&A is a significant player in the small to medium-sized employee benefits market with considerable strength in the public and non-profit financial services sector. Its low cost administrative services platform and service capabilities enable expansion in its client base of self-funded plans, providing a stable source of earnings for Great-West. In addition, its sizable book of closed annuity and individual life insurance generate a significant proportion of GWL&A's earnings.

Great-West's debt service capabilities are favorable. Great-West maintains an excellent liquidity posture supported by high quality investments, stable sources of earnings and solid coverage ratios. However, Great-West's overall financial flexibility was somewhat reduced following its 2003 acquisition of Canada Life Financial Corp. While the transaction was financed principally through issuance of common stock and cash, the issuance of additional preferred shares and securities increased overall leverage and lowered coverage ratios.

Offsetting rating factors include heightened leverage and significant goodwill resulting from acquisition activity and challenges associated with growth in its core U.S. business segment and expansion in Canada's highly competitive and saturated marketplace.

For a comprehensive list Great-West Lifeco Inc.'s FSRs, ICRs and debt ratings please visit www.ambest.com/press/061905greatwest.pdf.

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