Fitch Monitoring ULR Investigation

November 19, 2004

Fitch Ratings is actively monitoring the developments surrounding Universal Life Resources Inc. (ULR), a San Diego-based group insurance broker that is currently under investigation by New York Attorney General Elliot Spitzer and various state insurance regulators for illegal business practices related to contingent commissions.

In a civil lawsuit filed against Universal Life Resources, the New York Attorney General has accused ULR of colluding with a number of life insurers to steer business their way in exchange for ‘secret’ commissions and other undisclosed fees.

In a separate legal action, California Insurance Commissioner John Garamendi on Thursday filed suit against ULR, which entered into a consent decree, and four life insurers – MetLife, CIGNA, UNUMProvident and Prudential Financial – making similar allegations.

At this point, Fitch does not believe that the situation merits any change in the ratings assigned to the various life insurance companies that have placed group life and disability business working through ULR. Fitch’s current view is that any potential fines and/or settlements will not be large enough to warrant a change in ratings.

Fitch will continue to monitor developments in the situation to determine whether changes to individual company ratings are warranted. Potential future developments that may result in a negative rating action include criminal indictment of an insurer or executive management team, a significant increase in potential fines/settlements, and reputation damage that would impair the insurer’s competitive position or financial flexibility.

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