A.M. Best Downgrades Ratings of Illinois Mutual Life Insurance Company; Outlook Revised to Stable

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has downgraded the financial strength rating to B++ (Good) from A-
(Excellent) and the issuer credit rating to "bbb+" from "a-" of Illinois Mutual
Life Insurance Company (Illinois Mutual) (Peoria, IL). The outlook has been
revised to stable from negative.

These rating actions reflect A.M. Best`s concerns over Illinois Mutual`s modest
risk-adjusted capital position, elevated level of risk within its investment
portfolio, limited financial flexibility and its moderated operating results in
recent years.

Due primarily to impairments and unrealized losses in both its corporate fixed
income and structured securities portfolios, Illinois Mutual has recorded a
reduction in its total capital level. This decline in surplus, coupled with its
investment in structured securities such as collateralized debt obligations and
credit default swaps and its position in below investment grade bonds due to
credit migration has impacted Illinois Mutual`s risk-adjusted capital position.

Although Illinois Mutual has recognized impairments in 2008 and 2009, A.M. Best
notes that the company may be subject to additional write-downs, further
stressing its capital position. A.M. Best notes the absence of liquidity in
certain of these structured assets. In addition, Illinois Mutual`s exposure to
commercial mortgage loans, although the portfolio is currently performing well
and the size is intentionally being reduced, it represents an area of potential
stress given the challenges in the commercial mortgage lending arena.

Additionally, the company may face a challenge in managing surrender activity in
the interest-sensitive annuities that are reaching renewal status in a low
interest rate environment. However, current activity is well within pricing.
Earnings in the near term have moderated due to lower investment income and
other operating issues.

Illinois Mutual`s ratings continue to recognize its consistently positive net
gains from its operations, diversified lines of business, its growing life
insurance business and its continuing profitable niche in the disability
insurance marketplace. Illinois Mutual has taken proactive steps in reducing
unit costs and managing the remaining risk within its structured product
portfolio.

For Best`s Credit Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any
additional methodologies and factors that may have been considered, can be found
at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts:
Robert Stewart, 908-439-2200, ext. 5232
robert.stewart@ambest.com
or
Raj Shah, 908-439-2200, ext. 5409
raj.shah@ambest.com
or
Public Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2009