The global credit crunch, continued weakening in economic outlook worldwide and heightened financial risks have prompted several recent ratings actions. Despite these unprecedented economic pressures, William Penn Life Insurance Company of New York remains amongst the most financially sound life insurers with ratings of A+ (Superior) from A.M. Best and AA- (Very Strong) from Standard and Poors. The February 25, 2009 change in the rating from S&P was the result of a notching effect of a review of the UK life insurance sector. As a result, Legal & General Group Plc (our ultimate parent company) had its rating lowered one notch to AA (Very Strong) along with changes in ratings for a number of UK companies. This change was without regard to any change in the financial position of William Penn.

In fact, when S&P undertook a review of the US life insurance industry on February 26, 2009, it lowered the ratings of a significant number of companies such as Genworth, Protective, Prudential, Hartford, Lincoln National and Met Life. The recent S&P review further stress tested company investment portfolios but was also based on an assessment of its overall credit quality, competitive position, strength of management, investment and liquidity risk profile, and its operating performance. It is noteworthy that William Penn's rating was not lowered as a result of this review, evidencing its strengths in the key areas reviewed by S&P.

Our conservatively positioned and prudently managed investment portfolio has served us well during these difficult times. The portfolio has no exposure to direct mortgage loans, collateralized debt obligations, collateralized loan obligations, credit default swaps, owned real estate or equities investments.  What we do own is a highly liquid, well diversified investment grade corporate bond and very highly rated structured securities portfolio.

William Penn remains well positioned to weather the economic storm and will continue to operate in a financially responsible manner to insure that we will be there in the long run to honor our promises to all our customers and to keep it positioned as a highly rated company.

Contact Madison Brokerage for more information.

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