A.M. Best Affirms Ratings of Presidential Life.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and the issuer credit rating (ICR) of "bbb-" of Presidential Life Insurance Company (Presidential). Concurrently, A.M. Best has affirmed the ICR of "bb-"and the debt rating of "bb-" of $100 million 7.875% senior notes due 2009 for the parent company of Presidential, Presidential Life Corporation [NASDAQ: PLFE] (both of Nyack, NY). The outlook for all ratings is stable.

The ratings reflect Presidental's continued profitability, the increase in its absolute capital and surplus account and the adequate leverage ratios at the holding company. As a result of recent improvement in capitalization, Presidential Life Corporation's financial leverage--defined as total debt-to-capital--has improved to under 20% in 2006. The ratings also continue to recognize Presidential's good cost controls and operating profitability and diverse distribution relationships.

However, Presidential's risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio remains modest. The company also has a highly concentrated operational focus in the interest sensitive individual annuity market and high exposure to higher risk securities, including less than investment grade bonds and relatively illiquid private placements and limited partnerships.

For the past several years, Presidential has moderated its rapid growth rate to reduce capital strain from new business writings. Following a period of reported net losses and weak risk-adjusted capitalization, the company's financial operations have stabilized and net income has improved. This improvement is a result of management's efforts to improve operations and reduce capital volatility by lowering crediting rates, while gradually moderating sales as well as the risk and volatility in its investment portfolio and discontinuing unprofitable product lines.

Nonetheless, Presidential's investment portfolio includes an exposure to asset-backed and structured securities, less than investment grade bonds and illiquid investments in private placements and limited partnerships. A.M. Best continues to view this investment portfolio with concern, given Presidential's modest risk-adjusted capital.

A.M. Best also notes the risk associated with Presidential's concentrated market profile, which primarily consists of fixed annuity products, and the uncertainty regarding the future performance of its investment portfolio. While recognizing the historically good persistency of its inforce block, the company remains exposed to disintermediation risk. Presidential has taken several steps to moderate interest rate risk.

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

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.