A.M. Best Assigns Ratings to Funding Agreement-Backed Securities Established by Monumental Life Insurance Company.

OLDWICK, N.J. -- A.M. Best Co. has assigned an issuer credit rating (ICR) of "aa" to the two funding agreement-backed securities (FABS) programs established by Monumental Life Insurance Company (Monumental Life) (Baltimore, MD) and assigned a debt rating of "aa" to the outstanding notes issued under Monumental Life's European Medium-Term Notes (EMTN) and Global Medium-Term Notes (GMTN) programs. The ratings have a stable outlook. All other ratings remain unchanged.

Monumental Life is an indirect wholly owned subsidiary of AEGON US Corporation (AEGON USA group), a U.S. holding company and operating arm of AEGON N.V., a Netherlands-based multinational financial services conglomerate. Monumental Life, along with other core operating companies of the AEGON USA group, enjoys very strong market positions in the individual life insurance and annuity market segments and a growing book of institutional funding agreement business. In addition, the group generates favorable earnings, has very adequate capitalization and a highly disciplined approach to asset-liability management. These positive rating factors are tempered by a gradual increasing dependence upon spread based businesses.

AEGON USA group's growing asset-intensive business provides earnings diversification and a strong investment management platform with which to build its institutional product line. Moreover, the company's asset liability management discipline serves to ensure that a close match between funding agreement assets and liabilities is maintained.

Monumental Life's EMTN program was established to issue fixed or floating rate notes in one or more series to institutional investors outside of the United States on a private placement basis through a limited liability company, Monumental Global Funding Limited (MGFL) (Cayman Islands). The notes have been issued in various currencies, are limited recourse obligations of MGFL and are secured solely by a series of funding agreements sold to MGFL by Monumental Life.

Through its GMTN program--Monumental Global Funding II--Monumental Life has issued a discrete series of senior secured notes to U.S. institutional investors under SEC rule 144A. Each discrete series of notes is issued by a Delaware Statutory Trust, the principal asset being a series of funding agreements between Monumental Life and the various trusts. For each series, the funding agreement is earmarked solely for the benefit of the note holders; hence, their recourse is limited to the funding agreement securing the notes.

The notes issued under the funding agreement structures will carry the ICR of "aa" of Monumental Life, reflecting that each series of notes is secured by a first priority perfected security interest in the underlying funding agreements, which are unsecured obligations of Monumental Life's general account. In addition, in the event of insolvency claims, principal and interest under the funding agreements would be paid equally in priority (i.e. pari passu) with Monumental Life's policyholders. Therefore, in assigning the ICR above, A.M. Best believes investors in the notes are exposed to the credit, liquidity and business risks of the sponsoring insurance company, Monumental Life.

For a complete listing of Monumental Life's issuances under the FABS programs, please visit http://www.ambest.com/press/072101monumentallife.pdf.

For additional insight, please refer to A.M. Best's methodology, Rating Funding Agreement-Backed Securities at http://www.ambest.com/ratings/methodology.html.

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