A.M. Best Upgrades Rating of Nippon Life Insurance Company of America; Revises Outlook to Negative.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--June 9, 2004

A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Very Good) of Nippon Life Insurance Company of America (NLIA) (Des Moines, IA). The outlook has been revised to negative from stable.

This rating action reflects the implicit and explicit support of its parent organization, Nippon Life Insurance Company (Nippon Life) (Japan), which was recently rated A+ (Superior) by A.M. Best. Other rating factors include NLIA's favorable capitalization and established position in its niche customer market. Offsetting factors include NLIA's consistent underwriting losses in its primary medical line of business, geographic concentration risk and significant competition from local and national companies.

Nippon Life provides implicit and explicit support to NLIA in the form of key management personnel and views NLIA as a means to strengthen its presence in the United States. NLIA has traditionally focused on the sale of group health, life and disability products to the U.S. operations of Japanese companies. Group insurance for Japanese companies operating in the U.S. comprise approximately 48% of NLIA's in force book and NLIA maintains a significant share of the overall business. NLIA has increased emphasis on sales outside its Japanese clientele, which has resulted in this traditional book of business decreasing as an overall percentage of total sales. However, NLIA remains a relatively small firm competing against larger and more established medical writers. The company has focused its growth on markets outside its traditional niche, which will expose them to additional competitors.

NLIA continues to maintain a more than adequate risk-adjusted capital position. However, the company's capital position may be challenged due to the amount of new business growth. Although NLIA has improved its geographic diversity, it is still heavily dependent upon two very competitive markets, California and New York. Furthermore, NLIA's underwriting results in its core lines have been poor, as its operational focus continues to evolve. A.M. Best believes the company could continue to encounter fluctuations in its underwriting results.

For current Best's Ratings, independent data and analysis on more than 1,050 health companies and more than 130 HMO industry composites, please visit http://www.ambest.com/health/.

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.