A.M. Best Affirms Ratings of the Kansas City Life Group of Companies

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of �a� of Kansas City Life Insurance Company (Kansas City Life) [NASDAQ: KCLI] and its subsidiary, Sunset Life Insurance Company of America. Additionally, A.M. Best has affirmed the FSR of B++ (Good) and ICR of �bbb+� of Old American Insurance Company (Old American), the group�s final expense life insurance subsidiary. The outlook for all ratings is stable. All companies are located in Kansas City, MO.

The ratings reflect the group�s solid risk-adjusted capital position, favorable liability profile, consistently profitable statutory operating results and its continued strategic focus on growing its general agency distribution system. With no outstanding debt, an investment portfolio predominately comprised of publicly traded investment grade bonds and access to borrowing facilities at favorable rates, Kansas City Life continues to maintain a strong liquidity profile. Additionally, despite approximately $74 million of consolidated statutory net realized capital losses in 2008 and first quarter 2009, A.M. Best believes Kansas City Life�s investment philosophy is generally conservative. The investment portfolio maintains below average exposure to higher risk assets such as non-agency residential mortgage-backed securities, collateralized debt obligations (CDOs), commercial mortgage-backed securities and financial sector corporate bonds.

Partially offsetting these positive rating factors are the group�s lack of growth in total premium and deposits, its recent decline in capital and surplus as a result of realized investment losses, its exposure to interest rate sensitivity due to its fixed deferred annuity balances without surrender charge protection and the continued losses from the group insurance line. In addition, Kansas City Life lacks sufficient scale in its accident and health lines, as well as in its variable life and annuity businesses. The group also has allocated nearly 14% of invested assets to direct whole loan commercial mortgages, although A.M. Best notes that this portfolio is well balanced by both property type and geography, has demonstrated a strong performance history and is conservatively underwritten.

Despite two years of new business premium growth, Old American remains challenged to reverse its own trend of declining total life premiums, while minimizing the statutory strain from new business in order to ensure long-term capital growth.

For Best�s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

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.

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