- Moodys Financial Ratings System

Moody's is a ratings agency that provides opinions of the relative strength or weakness of insurance companies. Specifically, they summarize the likelihood that a company will be able to meet its senior policyholder obligations. Moody's considers both quantitative and qualitative factors in the following areas: product lines, industry competitive positions, markets, organizational structure, earnings trends and profitability, performance and quality of investments, asset/liability management and liquidity, surplus position relative to risk profile and affiliated companies. A very important part of the evaluation is understanding management's philosophy and the company's strategic direction. The rating, therefore, involves judgments about the future and includes assessments on how management and companies will respond to worst case scenarios.

Contact: Moody's Investors Service, 99 Church Street, New York, NY 10007, Telephone 212-553-1653.

Moody's uses a letter grade scale that ranges from Aaa ("Exceptional") for the highest rating to C ("Lowest") for the least favorable rating (ie., Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C). For classes Aa to B, Moody's adds a numerical modifier, from 1 (at high end of category) to 3 (at the lower end) to indicate the approximate ranking of a company in the particular classification.

Rating Categories
Aaa Exceptional security. Unlikely to be affected by change.
Aa Excellent security. Lower than Aaa because long-term risks appear some what larger.
A Good Security. Possibly susceptible to future impairment.
Baa Adequate security. Certain protective to future impairment.
Ba Questionable security. Ability to meet obligations may be moderate.
B Poor security. Assurance of punctual payment of obligations is small over the long run.
Caa Very poor security. There may be elements of danger regarding the payment of obligations.
Ca Extremely poor security. Companies are often in default.
C Lowest security. Extremely poor prospects of offering financial security

Moody's provides a range of financial analysis reports and ratings. For further information, write to Moody's Investors Service; 99 Church Street; New York, NY 10007; or telephone (212) 553-1658.

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