Statement on Moody’s Investors Service Rating Action of Aug. 26, 2011

Citing the impact of the company's Medicare Supplement Plan N product on their earnings expectations, Moody's Investors Service has lowered Mutual of Omaha's rating one notch, from Aa3 to A1 (good). Moody's also revised Mutual of Omaha's outlook upward to stable from negative.

"Despite this action, it is important to note that Mutual of Omaha is a strong, stable, growing company," said Executive Vice President and Chief Financial Officer Dave Diamond. "We remained profitable through the first two quarters of 2011, thanks to the earnings resulting from the strong financial performance of our other products and business units."

Plan N was one of the new Medicare Supplement plans provided for last year under the federal modernization of such plans. It was offered with limited underwriting for health conditions. The pricing of the plan was not sufficient to manage the claims experience, which was greater than projections, Diamond said.

"We have taken numerous corrective actions, including halting sales of Plan N products and filing for appropriate premium adjustments to mitigate the financial impact of the poor claims experience," Diamond said. "In addition, we are proactively addressing the impact on earnings with targeted expense reductions and other actions."

In its rating announcement, Moody's acknowledged the company's strength: "The A1 rating and stable outlook reflects the companies' established role in supplying life insurance and fixed annuity products to the mass market, their outstanding capitalization and high-quality investment portfolio."

The A1 rating is the fifth highest of Standard & Poor's 21 ratings and is indicative of a "strong capacity to meet financial obligations."

Mutual of Omaha's financial strength remains intact, with a surplus of $2.5 billion, Diamond said. "We have an exceptionally sound business strategy that allowed us to thrive and grow during one of our nation's most severe economic downturns. And we have one of the most talented, innovative, engaged and hard-working teams in the industry."

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