A.M. Best Assigns Initial Ratings to Surplus and Senior Notes of Ohio National Life; Affirms Financial Strength Rating.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 2, 2002

A.M. Best Co. has assigned an initial "a" debt rating to Ohio National Life Insurance Company's (ONLI) existing $50 million 8.5% surplus note, due in 2026 and the existing $35 million 8.875% surplus note, due in 2004.

Additionally, an initial debt rating of "a-" has been assigned to Ohio National Financial Services, Inc.'s (ONFS) existing $200 million 7% senior note due 2011. A.M. Best has also affirmed the financial strength rating of A+ (Superior) of ONLI and its wholly owned subsidiary, Ohio National Life Assurance Corporation (both of Cincinnati). All outlooks for these ratings are stable.

ONLI is owned by ONFS, an intermediate holding company, which is owned by Ohio National Mutual Holdings, Inc. (OHMH), a mutual holding company.

These rating actions reflect ONLI's strong risk-adjusted capitalization, its consistent improvement in and diversification of earning resources, its excellent investment composition, broad multi-channel distribution system and its prominent position in the mid-western and mid-southern regions.

Partially offsetting these factors--as a result of weaknesses in financial markets--are ONLI's modest decline in risk-adjusted capital in the last two years reflecting continued growth in core life insurance and annuity lines, combined with flat capital and surplus growth. A.M. Best notes that ONLI's overall level of capital is strong, and its mutual holding company structure provides added financial flexibility.

ONFS has continued to preserve a strong surplus position through favorable retained earnings, diligent management of asset and credit risk and successful access to the surplus note marketplace. Profitability has been generated by core individual and group annuities and ordinary life business segments. This favorable position, which has been supplemented by strong persistency and mortality experience, stable lapse ratios and dedicated attention to monitoring credited interest rates, helps the company maintain double-digit returns on equity measures.

Furthermore, ONFS has developed a secure position in the mid-western and mid-southern regions by focusing on the sale of value-added products through distinct career agency and PPGA distribution forces. The companies benefit from a regional focus on small to medium-sized towns and cities that are generally less competitive than the major metropolitan markets. Besides the individual life insurance activities, ONFS has developed a sizeable complementary pension and annuity segment, which like the group's life activities, is targeted to the small business and professional markets.

During the last several years, ONFS has deliberately slowed its premium volume from fixed group annuity products, which includes guaranteed investment contracts (GIC) and lotteries. Also, growth has been controlled in individual fixed annuity products in an effort to ease the strain of its capital base. This coincided with a renewed emphasis on traditional individual life sales, the companies' pension administration facility and development of an expanded variable annuity platform.

Ohio National Life Insurance Company reported statutory assets of $7.7 billion and capital and surplus of $468 million as of September 30, 2002.

The following debt rating is assigned to the existing surplus

notes:

Ohio National Life Insurance Company--

-- "a" rating on $50 million 8.75% surplus note, due 2016

-- "a" rating on $35 million 8.875% surplus note, due in 2004.

The following debt rating is assigned to the existing senior

notes:

Ohio National Financial Services, Inc.--

-- "a-" rating on $200 million 7% senior note, due 2011

The financial strength rating of A+ (Superior) has been affirmed

for the following companies:

-- Ohio National Life Insurance Company

-- Ohio National Life Assurance Corp.

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