September 2008

A Message On Assurity Life's Financial Strength and Investment Results

Dear Valued Policyholders:

During these tumultuous times in the financial markets, I thought it would be appropriate for me to comment about these historic disruptions relative to Assurity Life. The recent bankruptcy of Lehman Brothers, the federal government's takeover of Fannie Mae/Freddie Mac, and now a proposed comprehensive government-backed program to support the financial markets, have raised awareness of the current financial difficulties being faced by many companies in the financial services industry. Naturally, you may be interested in how Assurity Life is positioned to face these issues.

The markets have been very volatile in recent weeks, and the environment has been changing quickly. In light of that uncertainty, I'd like to start with some facts relative to Assurity Life:

1. We have no direct exposure to subprime or Alt-A mortgages, collateralized debt obligations or structured investment vehicles. These are the primary investments which have caused serious difficulties for so many financial services firms. Additionally, we do not issue and never have issued credit-default swap insurance, which is causing most of the problems for AIG.

2. Assurity has a very strong capital position. As of the end of August, our total surplus and asset valuation reserve (AVR) stands at nearly $269 million. This represents a strong capital-to-asset ratio of 12.4 percent. A strong capital-to-asset ratio is an important measure of financial safety and soundness.

3. Our risk-based capital (RBC) ratio exceeds 600 percent. RBC is another important measure of financial safety and soundness. Average RBC for our industry as of year-end 2007 was 402 percent.

4. This strong capital position means any write-off for investment losses we experience will still leave us with a very strong capital position.

5. Our rating with A.M. Best (the insurance industry's leading independent evaluator) has recently (last week) been reaffirmed at A- (Excellent) with a stable outlook.

I believe we will experience some investment write-offs prior to year-end 2008 . Although we've had no direct exposure to many of the investment vehicles that are causing other financial companies so many problems, we do have indirect exposure by holding bonds in our portfolio from a number of financial services firms which have experienced difficulties. Because of our diversification policies, no single holding from any company represents more than one-half of one percent of our total asset base. Plus, last week's announcement of greater government involvement and restructuring of the financial markets leads me to be more positive about the overall market situation.

One of Assurity's key values is financial strength. We have historically managed and continue to manage our investment portfolio in a conservative manner, realizing the commitments we make to you, our policyholders, are typically long-term. This philosophy has served our organization well for 118 years. During its long history, our company has survived numerous recessions, the Great Depression and many different wars, and has always honored our commitments to our policyholders.

I'll continue to keep you informed as time goes on. Please don't hesitate to contact me or any of our other senior officers with any specific questions.

Thanks for doing business with Assurity Life.

Sincerely,