A.M. Best Affirms Ratings of Great-West Life Assurance.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 14, 2002

A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) for Great-West Life Assurance Company (GWL), Winnipeg, Manitoba, and its wholly owned strategic subsidiary, London Life Insurance Company, London, Ontario.

Also affirmed is the financial strength rating of A++ (Superior) for Great-West Life & Annuity Insurance Co. (GWL&A), Greenwood Village, Colorado. Additionally, Great-West Life group's existing debt ratings and One Corporation's HMO ratings have been affirmed.

The ratings are based on the balance sheet strength and superior operating performance of GWL and London Life. The ratings also consider the strength and excellent operating performance of the sister company, GWL&A. Both GWL and GWL&A are core subsidiaries of Great-West Lifeco, Inc., an intermediate holding company ultimately controlled by the Power Corporation of Canada. Furthermore, the ratings reflect the companies' sound capitalization, strong debt service capabilities, leading market positions in core business lines, excellent and highly diversified earnings profile and effective asset-liability management practices. As major contributors to the parent company's overall results, the GWL and GWL&A operations are integral to Power's business strategy.

With prominent positions in core product lines in Canada and the United States, the Great-West Life group enjoys geographic and operational diversification. These companies enjoy favorable cost structures and excellent administrative capabilities, which represent competitive advantages in their respective markets.

GWL's consolidated Canadian operations is Canada's largest insurance organization in terms of assets, premium income and retail advice and service distribution. GWL, along with London Life, is a very strong player in Canada with leading market shares in multiple segments. Its market position in Canada is further enhanced by its large, well-managed and increasingly diversified distribution network.

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. The company's low cost administrative services platform enables it to expand its client base of self-funded plans, providing a stable source of earnings for Great-West Lifeco. Although current year earnings at GWL&A were impacted by loss provisions at its subsidiary, Alta Health & Life Insurance Co., Alta's existing business is in run-off and is not expected to depress future earnings.

GWL has demonstrated strict pricing discipline, enabling it to grow profitably in a highly saturated and competitive marketplace. Although sales expansion has been slowed by increased competition--particularly in individual life--GWL continues to employ its stringent pricing model, thus utilizing capital most effectively and generating very favorable shareholder returns.

While the former largest Canadian mutual companies are becoming stronger competitors through the added financial flexibility afforded by demutualization and expected consolidation, A.M. Best believes Great-West Life group's competitive position will remain strong based on its distribution advantage and long operating history as a well-managed stock life insurance organization.

Over the past several years, the Great-West Life group has accessed the capital markets to finance acquisitions and support the growth of its core businesses. With total borrowings--consisting of debt and preferred shares--at about one-third of consolidated capital, its overall financial flexibility is somewhat constrained. However, absent a significant acquisition, A.M. Best expects the group's leverage position to remain fairly stable in the near- to medium-term. In A.M. Best's opinion, the consistent flow of earnings from Great-West Life group's core businesses is sustainable, providing strong fixed coverage for the group's debt obligations.

Despite the companies' strong competitive advantages, A.M. Best anticipates that competition in Canada and the United States, will continue to intensify in the group's chosen markets, which could pressure revenue growth and earnings performance.

As of September 30, 2001, Great-West Lifeco reported consolidated assets (including segregated funds) of C$58.1 billion and capital stock and surplus of C$4.3 billion.

A.M. Best also has affirmed the financial strength ratings of A++ (Superior) for First Great-West Life & Annuity Insurance Co., Albany, New York and A (Excellent) for Alta Health & Life Insurance Co., Piscataway, New Jersey.

For a comprehensive list of the Great-West group's debt and HMO ratings, please visit http://www.ambest.com/press/great-west3.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.