A.M. Best Assigns Initial Debt Ratings to Great-West.

Business Editors & Insurance Writers

OLDWICK, N.J.--(BUSINESS WIRE)--April 4, 2001

A.M. Best Co. has assigned a rating of "aa-" to the existing senior debt and an "a" rating to the outstanding preferred shares of Great-West Lifeco Inc., Winnipeg, Manitoba.

In addition, an "a+" rating has been assigned to the subordinated capital income securities (SKIS) issued by Great-West Life & Annuity Insurance Capital I as well as the preferred shares issued by Great-West Life Assurance Company. The A++ (Superior) financial strength rating on the group's principal life/health insurance subsidiaries is unaffected.

The ratings reflect Great-West's solid market positions in its core business lines, superior operating performance, strong debt service capabilities, effective asset-liability management practices and sound capitalization. Great-West's long-standing favorable earnings posture is reflected in its expanding fee-based businesses, conservative pricing practices, low cost structure and meaningful economies of scale in the retirement savings, individual life and disability and group market segments in Canada. In addition, Great-West Life & Annuity's (GWL&A) strong market positions in the U.S. 401(k) and medical self-funded businesses contribute significantly to the parent company's consolidated earnings.

Great-West's well-established core Canadian business segments are supplemented by considerable reinsurance operations that add to the group's operational and earnings diversification. With the purchase of London Life Insurance Company, Great-West solidified its position in the Canadian individual life and group market segments. This acquisition also added a large, complementary career agency force to the organization. When considered in conjunction with intercorporate alliances, such as mutual funds distributor Investors Group, Great-West enjoys the advantage of the largest field force in Canada.

The company's operating results, on a consolidated and product line basis, have consistently outperformed its Canadian peers. A.M. Best believes the consistent flow of earnings from Great-West's core insurance businesses is sustainable and provides ample liquidity to strongly support the company's long-term debt service capabilities. In addition, Great-West benefits from the strength and support of its ultimate parent, Power Corporation of Canada (Power), a Montreal-based diversified holding company with significant interests in financial services and communications. As major contributors to the parent company's overall results, Great-West and GWL&A's operations are integral to Power's business strategy.

Great-West prudently manages its asset-liability exposure by matching the cash flow demands of liabilities with assets. The company's high-quality bond portfolio and well-managed mortgage portfolio have low default rates and produce consistent investment returns. Furthermore, the company's sizable segregated fund assets, characterized by more conservative guarantees, generate significant earnings and cash flows with relatively lower capital requirements.

Over the past several years, Great-West 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 Great-West's leverage position to remain fairly stable in the near to medium term.

Great-West Life Assurance Company is one of the largest life insurance companies in Canada, offering a wide range of life and health insurance, savings and retirement products and other financial services to individuals and corporations. As of December 31, 2000, the company reported consolidated assets (including segregated funds) of C$55.8 billion and capital stock and surplus of C$4.2 billion.

The following debt ratings have been assigned:

Great-West Lifeco Inc.-

-- "aa-" rating on C$200 million 6.75% Debentures due August,

2015;

-- "a" rating on Series 1, 5.00% Non-Cumulative Class A Preferred

Shares;

-- "a" rating on Series B, C$100 million 7.45% Non-Cumulative

First Preferred Shares;

-- "a" rating on Series C, C$100 million 7.75% Non-Cumulative

First Preferred Shares;

-- "a" rating on Series D, C$200 million 4.70% Non-Cumulative

First Preferred Shares

The Great-West Life Assurance Company-

-- "a+" rating on Series L, 5.20% Non-Cumulative Preferred

Shares;

-- "a+" rating on Series O, 5.55% Non-Cumulative Preferred

Shares.

GWL&A Financial Inc.-

-- Great-West Life & Annuity Insurance Capital I - "a+" rating on

C$175 million 7.25% Subordinated Capital Income Securities

(SKIS), backed by junior subordinated debentures due 2048.

London Insurance Group Inc.-

-- "a+" rating on Series D, C$125 million 7.25% Non-Cumulative

Class I Preferred Shares;

-- "a+" rating on Series E, C$125 million 7.20% Non-Cumulative

Class I Preferred Shares.

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.