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A.M. Best Company Affirms Pacific Mutual Life Rating

OLDWICK, N.J., Nov. 25 /PRNewswire/ -- Effective immediately, Pacific Mutual Life Insurance Co., Newport Beach, California, had its "A+" (Superior) Best's Rating affirmed. This rating reflects the company's excellent operating performance, its strong capitalization and its prominent positions in the group pension and upper-income individual life insurance markets. A.M. Best also notes Pacific Mutual's exceptional asset management capabilities, its strong liquidity position and management's well disciplined and highly focused strategies. In addition to the strength of its insurance activities, A.M. Best also views favorably Pacific Mutual's excellent performance and growing presence in the asset management arena. Through its affiliate, PIMCO Advisors L.P., one of the largest publicly-traded asset management firms in the United States, with over $105 billion of funds under management as of Sept. 30, 1996, Pacific Mutual complements its operations and financial strength with considerable fee-based income and broadened distribution for its asset management activities. PIMCO Advisors also provides considerable strategic benefits to Pacific Mutual pension operations. PIMCO's top-tier investment performance enables Pacific Mutual to effectively compete in the large-case investment-only segment by offering a variety of market index products to pension plan sponsors. A.M. Best's outlook for Pacific Mutual's rating is positive.

The company's core group pension and universal and corporate-owned life insurance products are somewhat sensitive to changes in interest rates, economic conditions and potentially unfavorable tax legislation. However, A.M. Best believes that the company's sophisticated and highly disciplined asset/liability management strategies, combined with its broad product portfolio and diversified and highly productive distribution capabilities, substantially mitigate concerns in these areas. Although Pacific Mutual is also somewhat exposed to the ongoing changes in the group health sector, through its employee benefits subsidiary PM Group Life Insurance Co., the organization has significantly reduced its reliance on earnings from this business unit over recent years. This percentage of earnings derived from PM Group has steadily declined over the past several years. A.M. Best expects this trend to persist into the near future, as competitive conditions and state regulatory reforms may continue to pressure margins in this segment and earnings continue to grow in its other core businesses. A.M. Best also notes that any potential volatility inherent in interest-sensitive or group health operations are more than offset by the solid risk-adjusted surplus position that has been built from the consistently strong operating performance of its life and pension operations, the issuance of a $150 million surplus note in 1993, and a substantial amount of unrealized equity in its investment subsidiaries.

Pacific Mutual's excellent liquidity position is supported by its sizable cash flow, its very stable liability structure, and investment-grade bonds, short-term securities and cash balances in excess of $7.0 billion (74% of invested assets excluding policy loans) at the end of the second quarter of 1996.

In addition, Pacific Corinthian Life Insurance Co. had its Best's Financial Performance Rating of "5" (Average) affirmed. It is expected that the company will be merged into Pacific Mutual Life late in 1997.

A.M. Best Company, established in 1899, is America's oldest and most widely recognized insurance rating and information source.

SOURCE A.M. Best Company
 -0- 11/25/96


/CONTACT: Michael Albanese of A.M. Best, 908-439-2200, ext. 5645/

CO: PM Group Life Insurance Co. ST: Arizona IN: INS SU: RTG

MP -- NYM098 -- 3699 11/25/96 11:45 EST http://www.prnewswire.com
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Publication:PR Newswire
Date:Nov 25, 1996
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