A.M. Best Downgrades Aviva Life and Annuity, Subsidiary

Following the acquisition of Aviva USA by Athene

OLDWICK, N.J., October 7, 2013—A.M. Best Co. has downgraded the financial
strength rating (FSR) to B++ (Good) from A- (Excellent) and the issuer
credit ratings (ICR) to “bbb+” from “a-” of Aviva Life and Annuity Company
(ALAC) (West Des Moines, IA) and its wholly owned subsidiary, Aviva Life
 and Annuity Company of New York (ALACNY) (Melville, NY) (together referred 
to as Aviva USA).

All ratings have been removed from under review with
 negative implications and assigned a stable outlook. These actions follow 
the completed acquisition of Aviva USA by Athene Holding Ltd (Athene),
which was announced in December 2012.

Concurrently, A.M. Best has affirmed the FSR of B++ (Good) and ICR of “bbb
+” of Athene Annuity & Life Assurance Company (Athene Annuity) and its
subsidiary, Investors Insurance Corporation (IIC), which will be merged
into Athene Annuity by year-end 2013, along with Presidential Life
Insurance Company (PLIC) (Nyack, NY).

The outlook for these ratings is
 stable.

The rating actions for Aviva USA, Athene Annuity and PLIC reflect the
common ownership by Athene and the anticipated  new annuity sales 
disruptions given the change in ownership as  product changes become 
implemented and shared among the companies. Additionally, the ratings of
 Aviva USA reflect the possible volatility in financial results over the 
intermediate term resulting from post-closing issues related to the Aviva
USA transaction, which the company needs to get past in order to establish
core trends for rating purposes, and the continued risks associated with
the integration of a much larger entity of almost three times the size of
Athene’s current organization.

The outlook for these ratings is
 stable.

The rating actions for Aviva USA, Athene Annuity and PLIC reflect the
common ownership by Athene and the anticipated new annuity sales
disruptions given the change in ownership

While A.M. Best remains concerned regarding 
these risks associated with the integration and the potential volatility in
financial results over the intermediate term, A.M. Best notes that Athene 
has established a history of successful acquisition integration while 
establishing an early trend of profitability.

 Offsetting these negative rating factors are Athene’s anticipated adequate 
level of risk-adjusted capitalization post acquisition, a track record of
successfully acquiring smaller to medium-sized transactions  with a
demonstrated ability to achieve earnings accretion early on and an
experienced management team in the annuity business with a history of
 capital support from institutional investors.

Upward rating movement could be achieved after Athene Annuity demonstrates
 a history of stable earnings, strong financial performance and minimal
 disruptions from the Aviva USA integration.

Downward rating actions could
 result if the organization experiences operating losses, poor investment 
performance or holds lower levels of risk-based capitalization. In
addition, negative integration outcomes could put into question the
viability of Athene to effectively expand retail operations or achieve
 profitable growth.

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s
rating process and contains the different rating criteria employed in the
rating process. Best’s Credit Rating Methodology can be found at 
www.ambest.com/ratings/methodology. 

A.M. Best Company is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.