2008-04-09 23:41:44 -

www.ambest.com - A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of The Penn Mutual Life Insurance Company (PML) (Horsham, PA) and its subsidiary, The Penn Insurance and Annuity Company (Wilmington, DE). Concurrently, A.M. Best has affirmed the debt rating of "a" on $200 million 6.65% 30-year

surplus notes due 2034 of PML. The outlook for all ratings is stable.

These rating actions are based on PML's superior levels of capitalization, positive consolidated operating results and well established and focused strategy targeting the affluent market. PML has consistently grown its absolute levels of surplus in recent years, leading to high risk-adjusted capitalization relative to its insurance and investment risks. In addition, PML retains modest leverage, with debt-to-total capital of less than 15% at year-end 2007. Interest coverage remains strong for the current ratings.

PML maintains a very focused operating strategy, utilizing its core competencies within its individual life, annuity and broker/dealer operations. The group maintains a well balanced and effectively managed cost structure, which is bolstered by solid earnings performance from Janney Montgomery Scott LLC, its broker/dealer subsidiary. PML's GAAP earnings attributed to its insurance products and broker dealer segments have been consistent.

Partially offsetting these strengths are the challenges associated with the impact of the ongoing low interest rate environment causing spread compression, which along with consistent modest realized losses and strain from statutory reserving requirements for its universal life products with secondary guarantees, has led to some volatility in its reported statutory results, including markedly lower net income reported in 2007. In addition, the highly competitive individual life insurance segment makes maintaining consistent and sustainable revenue growth and earnings performance challenging.

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

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:
Andrew Gold, 908-439-2200, ext. 5487
andrew.gold@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