Fitch Places Security Benefit Life Insurance Company’s Ratings on Watch Positive

Fitch Ratings has placed the 'CCC' Insurer Financial Strength (IFS) ratings of Security Benefit Life Insurance Company (SBLIC) and its affiliate, First Security Benefit Life Insurance and Annuity Company of New York (FSBLIANY), collectively referred to as Security Benefit, on Rating Watch Positive.

The rating action follows yesterday's announcement that Security Benefit Corporation, which is the intermediate holding company that owns SBLIC and FSBLIANY, has reached a definitive agreement to be acquired by Guggenheim Partners, LLC (Guggenheim) and a group of investors. The new owners will then pursue a demutualization of the insurance operations. Guggenheim has served in an investment advisory role for Security Benefit's general account since June 2009.

Fitch downgraded Security Benefit's ratings to 'CCC' on June 1, 2009, reflecting Fitch's growing concerns around a significant deterioration in SBLIC's risk-adjusted capital and liquidity position, as well as the company's exposure to further investment impairments. Fitch believes that the investment of approximately $400 million announced by the Guggenheim-led group will serve to enhance Security Benefit's capital position, and may lead to an upgrade of the company's ratings following completion of the transaction. Fitch will also evaluate the planned capitalization after demutualization.

Security Benefit Corporation is a Topeka, Kansas-based financial services organization marketing fixed and variable annuities, mutual funds, various retirement programs and administrative services. The primary operating company, SBLIC, reported statutory admitted assets of $9.5 billion and capital and surplus of $285.4 million at Sept. 30, 2009.