A.M. Best Affirms Ratings of Merrill Lynch Life and Its Affiliate, ML Life Insurance Company of New York.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit ratings (ICR) of "a" of Merrill Lynch Life Insurance Company (Little Rock, AR) and ML Life Insurance Company of New York (New York, NY) (together known as the Merrill Lynch Insurance Group) (MLIG). The outlook for all ratings is stable.

The ratings of MLIG reflect the significant benefits it enjoys as a subsidiary of the Merrill Lynch & Co., Inc. (Merrill Lynch), one of the world's largest financial services and advisory companies. MLIG is a key operating entity within Merrill Lynch with full access to over 15,700 financial advisors. MLIG maintains a strong market position due to Merrill Lynch's global brand name recognition, MLIG's excellent financial flexibility, its favorable liquidity position and strong risk management oversight. Additionally, Merrill Lynch executed a Keep Well Agreement in June 2003, demonstrating its commitment to provide financial support as needed to MLIG. A.M. Best expects Merrill Lynch to remain supportive of MLIG through its continued product rollout, as MLIG continues to strengthen its enterprise risk management practices as it maintains a favorable market position as a variable annuity writer.

Offsetting these strengths is the limited scale of MLIG's operations within Merrill Lynch, its narrow product portfolio and the high correlation between MLIG's results and the performance of the equity markets. A.M. Best believes potential remains for future earnings volatility due to this combination of factors; however, A.M. Best expects MLIG to continue to maintain adequate risk-adjusted capitalization.

MLIG has introduced several new variable products as part of its strategy to re-focus on the manufacturing and marketing of proprietary products to meet the evolving wealth management needs of Merrill Lynch clients. These new initiatives have resulted in sales and earnings growth through 2006. A.M. Best believes that the new product suite will help to improve MLIG's revenues to achieve a competitive edge among the products available through the Merrill Lynch financial advisors.

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

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.