A.M. Best Takes Various Rating Actions on Forethought Financial Services Companies; Removing Ratings from Under Review.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of Forethought Life Insurance Company (FLIC) and removed the rating from under review. Additionally, A.M. Best has assigned a financial strength rating of A- (Excellent) to Forethought Life Assurance Company (FLAC) (both of Batesville, IN). A.M. Best has also affirmed the financial strength rating of B++ (Very Good) of FLIC's wholly-owned life insurance subsidiary, Arkansas National Life Insurance Company (Little Rock, AR) and removed its rating from under review. The outlook for all ratings is stable, except for FLIC, which has a negative outlook.

These respective rating actions follow the consummation of the purchase of the companies by the newly formed FFS Holdings, Inc. and the completion of analysis by A.M. Best regarding the impact of the transaction on the respective companies.

The rating of FLIC recognizes its historically strong penetration within its target pre-need market segment through its substantial network of funeral home distributors, high level of operating earnings and adequate capital at the operating company. A.M. Best anticipates that the company will continue to be able to operate within historical operating margins and generate sufficient capital to support its rating. New business for the organization will be written by FLIC, and initial statutory strain is expected to generate operating losses in the short term, while the low interest rate environment will continue to pressure operating margins. A.M. Best also anticipates some near-term disruption in FLIC's marketing, noting premium levels have already declined in recent years. FLIC faces considerable competition and will need to achieve the sales, capitalization and earnings goals it shared with A.M. Best to remain at its current rating level. As a result, A.M. Best has maintained a negative rating outlook on FLIC.

As part of the acquisition, FLIC's existing business in-force was reinsured to FLAC. The rating of FLAC recognizes the strong persistency, predictable mortality and favorable earnings of this block of business, which will represent $2.8 billion of insurance reserves. A.M. Best expects that FLAC will maintain strong capital measures to support this block of business but notes the leverage added to the organization to fund the acquisition and the new strict dividend requirements for the company.

The rating for Arkansas National Life represents the ancillary status of the company, its very good capital position and its historically profitable operating results. A.M. Best expects the company will continue to operate in its single state market, while maintaining its limited business profile.

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.