2012 amb final_02_22_2012

Presidential Life

Insurance Company

A.M. Best Company Meeting

February 27, 2012

“The New Era for Presidential Life has begun.”

Donald L. Barnes, Vice Chairman of the Board, CEO and President

Presidential Life Insurance Company2

Table of Contents

Section Page(s)

Executive Management Team 3

A.M Best's 2011 Expressed Concerns 4-9

Corporate Overview 10-15

Core Business Strategy 16-18

Execution of Strategic Initiatives 19-22

Annuity Contract Products 23-30

Life Insurance Products 31-33

Accident & Health Insurance Products 34-36

Marketing and Distribution Perspective 37-44

Investment Portfolio Overview 45-61

Actuarial Perspectives 62-69

Financial Projections and Dividend Strategy 70-73

Appendix 74-89


Executive Management Team

Donald L Barnes

Vice Chairman of

the Board,

CEO and President

P.B. (Pete) Pheffer

Senior Vice President

Chief Financial

Officer and Treasurer

Mark A. Abrams

Executive Vice

PresidentChief Investment

Officer

Mitchell R. Anderson

Senior Vice President

Chief Marketing Officer

Paul A. Marsico

Vice President

of Human Resources

and Administration

Tara A. O’Dom

Vice President

of Operations

Duncan Szeto

Vice President

Chief Actuary

4

Presidential Life

Insurance Company

A.M. Best Company’s Public and

Non-Public Expressed Concerns

AMB Public and

Non-Public Stated Concerns

• “The mono-line nature of Presidential Life's

product line makes diversification of product and

revenues a rating issue; however, it alone does not

imply a rating ceiling for the company.”

• “A concentration in geographic territories is an

added concern as it is viewed as a possible hurdle

for the company as it grows.”

• “Reaching planned milestones in regards to the

execution of the business plan will be key….”

Presidential Life Insurance Company

5

AMB Public and

Non-Public Stated Concerns (Continued)

• Objective of this presentation is to address each of

these concerns and any others that may emerge

• Our goal is to achieve an “A” rated company status

this year to enable us to successfully distribute our

products and accelerate our strategic initiatives

• We have conducted extensive comparative analyses

to an 82 company universe of mono-line ordinary

annuity providers to justify the merits of our position

• Comprehensive content of this presentation is

designed explicitly to achieve this critical milestone


6


AMB Public and

Non-Public Stated Concerns (Continued)

• Two notch downgrade

in October of 2002 to a

“B+” FSR resulted in a

predictable and sustained

adverse impact

• An AMB FSR of at least

an “A-” is an empirically

supported upgrade as we

shall demonstrate

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A & H

Life

SPIIA

SPIA

FPDA

SPDA

B+

B++

Composition of Premiums and Annuity

Considerations by Product by Year


2011 RBC and BCAR Capitalization

Metrics & Trend Support an FSR Upgrade

• RBC increased to 556%,

its highest level in over a

decade

• BCAR metric reached an

internally estimated 218%,

its second highest level in

over a decade

• The only inconsistent data

point is the AMB FSR

• Further empirical analysis

on this issue to follow

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RB

C

BC

AR

Risk Based Capital (RBC)

Best's Capital Adequacy Ratio (BCAR; 2Y)

B+

B++


Statutory Financial Perspective Based on

NGFO (1) and Best’s Operating ROE (BOROE) (2)

(1) After dividends to policyholders and federal income

taxes and before realized capital gains or losses

(2) NGFO / Average policyholder surplus

• As of year-end 2011, statutory net gains from operations (NGFO) were $98.0 million and the BOROE was 31.9%

• PLIC’s highest NGFO in over two decades

• Across the two decade time horizon presented the average BOROE was 17.9%

0%

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NGFO Best's Operating ROE (2Y)

10

Presidential Life

Insurance Company

Corporate Overview


11

2011 Selected Financial Highlights

• Statutory Data:

• Net gains from operations $98.0 million, up 263%

• Net Income $51.3 million, up 50%

• Capital and Surplus $345.4 million, up 26.5%

• A.M. Best’s Operating ROE 31.9%, up from 10.0% in 2010

• RBC: 556%; Internally estimated BCAR: 218%

• Net admitted assets $3.6 billion

• GAAP Data:

• Net income $38.9 million, up 80.9%

• Shareholders’ equity $787.9 million, up 15.5%

• Total return on equity x-AOCI 6.7%

• Total assets $4.0 billion

• Equity market capitalization ~ $340 million


Pro forma Organizational Chart

Presidential

Life Corporation

Presidential Life

Insurance Company

Presidential Life

Insurance

Company USA (1)

(1) Non-New York operating subsidiary; PLIC USA

• PLIC-USA will provide

catalyst toward national

presence; a first in the

Company’s history

• Formation designed to

accelerate product

innovations and enhance

competitive position


2011 Premiums and Annuity

Considerations by Product Type

• Total premiums and

annuity considerations

were $94.5 million

• Deferred and immediate

annuities represented

66.8%, or $63.1 million

of this total

• The balance of

33.2%, or $31.4 million

were derived from life

and A & H products

SPDA

29.2%

FPDA

4.7%

SPIA

10.2%

SPIIA

22.7%

Universal

Life

1.2%

Ordinary Life

21.7%

A & H

10.3%


Considerations by Product

2011 Total: $94.5 Million


Year-end 2011 Reserve

Composition by Product

• Deferred and

immediate annuities

represented 93.1% of

gross GAAP reserves

of $3,041.6 million at

year-end 2011

• The balance of 6.9% of

these reserves, or

$209.9 million was

dedicated to the life

and A & H products

SPDA

58.7%

FPDA

7.1%

SPIA

21.9%

SPIIA

5.4%

Universal

Life

5.2%

Ordinary Life

1.7%

A & H

0.0%

Composition of GAAP Reserves

by Product

2011 Total: $3,041.6 Million


2011 Premiums and Annuity

Considerations by States and Territories

• New York represented

47.9% of total premiums

and annuity

considerations*

• Other jurisdictions were

31.7%, with the balance of

20.4% in Florida and

Pennsylvania

• Strategic initiatives

explicitly designed to

diversify sales

composition nationally

New York

47.9%

Florida

14.9%

Pennsylvania

5.5%

Other

Jurisdictions

31.7%


Considerations by States and Territories

2011 Total: $92.3 Million*

* Statutory: Schedule T Line 59 sub-total

16

Presidential Life

Insurance Company

Core Business Strategy


Core Business Strategy

• Core business strategy is to expand our individual annuity

business and to increase our risk-adjusted returns on

invested capital by prudently managing investment spreads

and investment risk

• Expand regional platform into national platform

• Broaden individual annuity product offerings to include all

four major product types

• Build on our distribution channels

• Enhance investment spread capabilities

• Focus of high quality service to agents and policyholders


Corporate Focus

• Transform company to a National annuity and life

insurance provider

• Diversify product portfolio and distribution

channels to accelerate organic growth

• Consistently deliver profitable earnings growth

• Dramatically increase financial transparency; both

externally and internally to ensure accountability

• Achieve highest sustainable stock valuation for

shareholders over time

19

Presidential Life

Insurance Company

Execution of Strategic Initiatives


Milestones

• Individual fixed indexed annuity product in final

stages of development

• Preparation of filing with Interstate Compact

simultaneously underway

• Recruiting mid-size IMOs with a target of 40-50

under contract by fixed indexed product launch

• New branding and logo initiatives coming to

fruition

• Revitalization and creation of new consumer and

agent brochures being finalized


20


Milestones (Continued)

• Purchased and implementing the following

insurance systems software

• Policy Administration

CSC Wealth Management Accelerator

• Correspondence & Print

Oracle Documaker

• Illustration

iPipeline Illustration

• Contact Center Management Shoretel Contact Center Management


21


Milestones (Continuing)

• Financial systems to be upgraded and expanded to

support PLIC-USA, enhancements include

• Agency Management exL LifePro

• Financial Accounting StoneRiver Freedom

• Investment Accounting SS&C CAMRA

• Valuation

Polysystems AnnuityMaster


23

Presidential Life

Insurance Company

Annuity Contract Products


Annuity Contract Products

Annuity Products

Deferred

Annuities

Immediate

Annuities

Single Premium Flexible Premium Single PremiumImmediate

Income

• Execution of our strategic plan will diversify this individual fixed annuity product offering to include Individual Fixed Indexed and Market Value annuity products


Annuity Portfolio Perspective Annuity Considerations by Product by Year

Annuity Considerations

FPDA

7.0%

SPDA

43.7%

SPIA

15.3%

SPIIA

34.0%


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SPDA FPDA SPIA SPIIA

B+

B++


Annuity Portfolio PerspectiveReserves by Product by Year

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SPDA FPDA SPIA SPIIA

Annuity Reserves

SPIA

23.5%

FPDA

7.6%

SPDA

63.0%

SPIIA

5.8%



Deferred Annuity PerspectiveReserves and Annuity Considerations by Year

• As of year-end 2011, deferred annuity reserves were $2,001.1 million or 70.7% of the total annuity portfolio

• Deferred product annuity considerations in the same year were $32.0 million representing 50.7% of total annuity sales

• Qualified and non-qualified products represented 45.1% and 54.9%, respectively

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Reserves Annuity Considerations (2Y)

B+

B++


Deferred Annuity Surrenders, SurrenderRates and Percentage Subject to Surrender Charges

• The absolute amount and rate of surrenders have declined in each of the last four years

• At year-end 2011 the proportion of deferred annuities subject to surrender charges was 43.6%

• The surrender rate was 5.5% or $114.9 million at year-end 2011; fourth consecutive year of decline

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Surrenders

Surrender Rates (2Y)

Percentage Subject to Surrender Charge (2Y)

Surrender Charge (SC) Perspective

Account Value SC Expirations by Year

1.00%

5.75%2.00%

0.57%

3.00%

29.25%

4.00%

21.84%

5.00%

26.70%

6.00%

15.19%7.00%

0.61%

8.00%

0.07%

9.00%

0.01%

Deferred Annuities in Surrender

Period by Surrender Charge Percentage

as of Year-end 2011


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45%

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Account Values by Future

Surrender Charge Expiration Year

(in millions)

Account Values % Subject to SC (2Y)



Immediate Annuity Perspective

Reserves and Annuity Considerations by Year

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Reserves Annuuity Considerations (2Y)

• As of year-end

2011, immediate

annuity reserves were

$830.4 million or

29.3% of the total

annuity portfolio

• Immediate annuity

considerations in the

same year were $31.1

million or 49.3% of

the total annuity

portfolio

B+

B++

31

Presidential Life

Insurance Company

Life Insurance Products


Life Insurance Products

• Execution of the strategic plan will also diversify our life insurance offerings through the introduction of an Indexed Single Premium Whole Life insurance product

Life Insurance

Individual

Life

Group

Life

Continuing

Graded Benefit

Whole Life

Simplified

Issue Whole Life

Group Term

Insurance

Market

ContingentClosed Block

Universal

Life

Whole

Life

Term

Insurance

Single Premium

Universal Life


Life Insurance PerspectiveReserve Composition and Total Sales by Year

Ordinary Life

24.7%Universal Life

75.3%


Reserves

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ale

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Res

erves

(in

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UL Reserves OL Reserves Total Life Sales (2Y)

B+

B++

34

Presidential Life

Insurance Company

A & H Insurance Products


A & H Insurance Products

Accident &

Health Insurance

Individual Group

New York Statutory

Disability Benefits

Medical

Stop Loss

Hospital

Indemnity

Impaired

Risk Disability

Accident, Emergency Room,

Accidental Death & Dismemberment

Dental


A & H Insurance Perspective

Premiums by Product by Year

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ss A

& H

Pre

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Wri

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(th

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Group Accident, ER and AD & D

Group Hospital Indemnity

Individual Impaired Risk Disability

Group Medical Stop Loss

Group Dental

GNYSDB (1)

Group Hospital

Indemnity

8%

Group Accident, ER,

AD & D

1%

Individual Impaired

Risk Disability

4%

Group Dental

31%

Group Medical

Stop Loss

17%

GNYSDB (1)

43%

Total: $9,700.9 Thousand

(1) GNYSDB: Group New York Statutory Disability Benefits

B+

B++

2011 Premium Composition

37

Presidential Life

Insurance Company

Marketing and

Distribution Perspective


Current Distribution System

• Presidential currently competes in the guaranteed traditional Fixed Book Value Deferred & Immediate Annuity marketplace

• Products distributed by Independent Producer Channel

• Presidential Life has 1,273 independent General Agents (GA) nationally

• The composition of GA’s include brokerage general agencies, personal producing GAs as well as small and large Insurance Marketing Organizations (IMOs)

• Currently we have over 9,000 independent agents


2010 Industry Individual Fixed Annuity Sales

Composition of $62.8 Billion by Distribution Channel*

Large Regional

BD, 4.2%

Direct/Third

Party, 3.4%

Independent

BD, 3.2%

Other, 3.9%

Wirehouses,

1.1%

Captives,

12.2%

Banks & S&Ls,

23.0%

Independent

Producers,

49.1%

Sales Composition by

Distribution Channel

*Source: Beacon Annuity Research

Total 2010 Sales: $62.8 Billion

• In 2010, the Independent

Producer channel owned

49.1% of the individual

fixed annuity industry

sales

• Banks & S & Ls were the

second largest distributor

harboring 23.0% of the

industry market share

• Captives captured 12.2%

of the market with the

balance quite fragmented


Industry Individual Fixed Annuity

Market Sales Composition by Product by Year*

Sales Composition by Product


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TT

M 9

/30

/201

1

Sales Composition by Product by Year

(in billions)

MVA Immediate

Book Value Deferred Fixed Indexed


Book Value

Deferred

34.2%

MVA

9.1%

Fixed Indexed

45.4%

Immediate

11.2%


Independent Producer Individual Fixed

Annuity Market Sales Composition by Product by Year*

Sales Composition by Product

MVA

8.8%Immediate

5.1%

Fixed

Indexed

79.2%

Book Value

Deferred

6.9%


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Sales Composition by Product by Year

(in billions)

MVA Immediate

Book Value Deferred Fixed Indexed


Broadening Distribution Channels

• Diversification of distribution channels toward those actively

selling Presidential’s current individual annuity product portfolio

is an important strategic focus toward accelerating organic growth

• Demand for individual book value deferred, immediate and fixed

indexed annuities remains robust as the matrix below illustrates

42

Individual Fixed Annuity Product

Distribution Channel BVD FIA MVA Immediate Total

Banks/S&Ls 48.5% 6.4% 21.6% 13.2% 23.0%

Captives Agents 20.1% 2.7% 6.3% 31.2% 12.2%

Direct/Third Party 7.2% 0.0% 1.8% 6.7% 3.4%

Independent B/Ds 3.6% 0.7% 4.9% 10.4% 3.2%

Independent Producers 9.9% 85.6% 47.7% 22.3% 49.1%

Large/Regional B/Ds 6.8% 0.1% 7.1% 10.7% 4.2%

Other 3.4% 4.2% 6.3% 1.9% 3.9%

Wirehouses 0.6% 0.2% 4.3% 3.5% 1.1%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

Market Size (in billions) $ 21.5 $ 28.5 $ 5.7 $ 7.0 $ 62.8

(Source: 2010 Beacon Annuity Research)

New Product Introduction

Progress to Date

• PLIC-USA is the cornerstone to the broadening of

individual fixed annuity portfolio to include fixed

indexed and market value annuities

• Indexed product in final stages of development and

will be filed with Interstate Compact (41 states)

• Branding initiatives almost complete; advertising

agency engaged to assist in new brand and logo

• New agent distribution contracts currently in review

• Finalizing new consumer and agent brochures


43

New Product Introduction

Progress to Date (Continued)

• IMO distributors targeted; 40-50 IMOs anticipated by

product launch

• To accommodate agent training website initiative,

Quest Education services was engaged

• Launch meeting schedule to be finalized in April

• Development of next product to begin in May

following the Interstate Compact filing of our new

Fixed Indexed Annuity (FIA) product• Presidential Life’s FIA design will capitalize on the mistakes of

competitors and insights derived from our distributors


44

45

Presidential Life

Insurance Company

Investment Portfolio

Overview


2011 Portfolio Activity

• Maintained sector diversification within core

portfolio

• Since year-end 2008, maintained discount to par

pricing discipline on new money investments of

approximately $1.0 billion


2011 Portfolio Activity (Continued)

• Limited Partnership (LP) portfolio

• Portfolio generated pre-tax income of $41.1 million with a corresponding yield of 24.13%

• LP portfolio represented 4.37% of total cash & investments at year-end

• Completed hedge fund redemptions of $27.7 million

• No new LP commitments since April 2007

• Unfunded commitments of $41.7 million at year-end


2011 Portfolio Activity (Continued)

• Reinvestment strategy of proceeds from LP redemptions and returned capital

• Externally managed, diversified asset portfolio

• Residential MBS, high-yield bonds, leveraged loans and emerging market corporate debt

• Target BB/B blended credit exposure

• Lower capital requirements

• More liquidity

• Coupon securities

• More transparency

Investment Grade

Corporate

58.9%

Public Utilities

12.7%

States, Municipalities &

Political Subdivisions

9.7%Limited Partnerships

4.4%

Below Investment Grade

Corporate

4.3% Mortgage Backed Securities

3.2%

Cash and Short-term

Investments

2.8%

Investment Grade Preferred

Stocks

1.3%

U.S.

Governments, Government

Agencies and Authorities

1.2%

Below-Investment Grade

Preferred Stocks

0.8%

Policy Loans

0.5%

Derivatives

0.1%

Equity Securities

0.0%Real Estate

0.0%


Composition of Cash & Investments by Category

and Ratio of Investment Grade Quality to Total*

2011 Total: $3,819.5 million

85.5

8%

85.6

4%

87.2

9%

87.3

3%

88.8

8%

88.9

6%

2006

2007

2008

2009

2010

2011

Inves

tmen

t G

rad

e to

Cash

& I

nves

tmen

ts* GAAP metrics; Investment grade Moody’s based.

Historical Composition of Total

Cash & Investments by Investment Category


50

(in millions) Period Ended,

12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

Carrying % of Carrying % of Carrying % of Carrying % of Carrying % of Carrying % of

Investment Category* Value Total Value Total Value Total Value Total Value Total Value Total

Fixed maturities:

U.S. government, government

agencies & authorities $ 45.3 1.2% $ 167.5 4.5% $ 254.9 7.0% $ 356.1 10.6% $ 528.1 13.2% $ 472.8 10.6%

States, municipalities and

political subdivisions 371.6 9.7% 288.7 7.7% 99.9 2.8% - 0.0% - 0.0% - 0.0%

Investment grade corporates 2,250.0 58.9% 2,088.3 56.0% 1,827.5 50.4% 1,590.2 47.5% 1,780.4 44.5% 1,798.0 40.1%

Public utilities 485.8 12.7% 474.3 12.7% 444.3 12.3% 394.3 11.8% 444.6 11.1% 349.4 7.8%

Below investment grade

corporate 163.2 4.3% 111.7 3.0% 163.6 4.5% 104.7 3.1% 148.2 3.7% 227.3 5.1%

Mortgage backed securities 122.5 3.2% 158.5 4.2% 197.2 5.4% 207.4 6.2% 268.8 6.7% 274.5 6.1%

Total fixed maturities $ 3,438.5 90.0% $ 3,289.1 88.1% $ 2,987.4 82.4% $ 2,652.7 79.2% $ 3,170.1 79.2% $ 3,122.1 69.7%

Preferred stock:

Investment grade $ 50.3 1.3% $ 60.0 1.6% $ 76.0 2.1% $ 65.8 2.0% $ 101.4 2.5% $ 128.0 2.9%

Below investment grade 32.0 0.8% 42.9 1.1% 23.6 0.7% 6.6 0.2% 10.7 0.3% 11.7 0.3%

Total preferred stock $ 82.3 2.2% $ 102.9 2.8% $ 99.7 2.8% $ 72.4 2.2% $ 112.0 2.8% $ 139.7 3.1%

Total fixed and preferred $ 3,520.8 92.2% $ 3,392.0 90.9% $ 3,087.0 85.2% $ 2,725.1 81.4% $ 3,282.1 82.0% $ 3,261.8 72.8%

Common stock $ 1.3 0.0% $ 1.3 0.0% $ 1.9 0.1% $ 3.0 0.1% $ 9.7 0.2% $ 45.3 1.0%

Other investments:

Policy loans $ 18.4 0.5% $ 19.6 0.5% $ 19.0 0.5% $ 18.9 0.6% $ 19.2 0.5% $ 18.0 0.4%

Real estate 0.4 0.0% 0.4 0.0% 0.4 0.0% 0.4 0.0% 0.4 0.0% 0.4 0.0%

Limited partnerships 166.9 4.4% 195.5 5.2% 212.7 5.9% 253.8 7.6% 317.0 7.9% 286.1 6.4%

Derivatives 3.4 0.1% 9.4 0.3% 0.4 0.0% 0.5 0.0% 7.0 0.2% 9.8 0.2%

Short-term 61.2 1.6% 108.0 2.9% 293.1 8.1% 342.2 10.2% 363.1 9.1% 839.5 18.7%

Total other investments $ 250.4 6.6% $ 332.9 8.9% $ 525.6 14.5% $ 615.9 18.4% $ 706.7 17.7% $ 1,153.8 25.7%

Total investments $ 3,772.4 98.8% $ 3,726.2 99.8% $ 3,614.6 99.8% $ 3,343.9 99.9% $ 3,998.5 99.9% $ 4,460.8 99.6%

Cash $ 47.1 1.2% $ 5.9 0.2% $ 8.8 0.2% $ 3.8 0.1% $ 3.6 0.1% $ 19.8 0.4%

Total cash & investments $ 3,819.5 100.0% $ 3,732.1 100.0% $ 3,623.3 100.0% $ 3,347.8 100.0% $ 4,002.1 100.0% $ 4,480.7 100.0%

* GAAP metrics; Investment grade Moody’s based.


Historical Rating Composition of Fixed

Maturities and Investment Grade Focus

(in millions) Period Ended,

12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

NAIC Rating/ Carrying % of Carrying % of Carrying % of Carrying % of Carrying % of Carrying % of

Moody's Equivalent Value Total Value Total Value Total Value Total Value Total Value Total

Investment grade:

1 / (Aaa, Aa, A) $ 1,670.2 48.6% $ 1,776.4 54.0% $ 1,612.4 54.0% $ 1,587.4 59.8% $ 1,947.7 61.4% $ 1,860.8 59.6%

2 / (Baa) 1,569.1 45.6% 1,366.7 41.6% 1,173.9 39.3% 923.0 34.8% 1,011.6 31.9% 986.5 31.6%

Total investment grade $ 3,239.3 94.2% $ 3,143.1 95.6% $ 2,786.4 93.3% $ 2,510.4 94.6% $ 2,959.3 93.4% $ 2,847.3 91.2%

Below investment grade:

3 / (Ba) $ 120.1 3.5% $ 107.9 3.3% $ 160.8 5.4% $ 99.5 3.8% $ 120.4 3.8% $ 168.9 5.4%

4 / (B) 55.2 1.6% 27.4 0.8% 22.5 0.8% 13.9 0.5% 59.9 1.9% 62.5 2.0%

5 / (Caa, Ca) 24.0 0.7% 8.1 0.2% 9.9 0.3% 19.0 0.7% 28.7 0.9% 33.0 1.1%

6 / (C) - 0.0% 2.7 0.1% 7.8 0.3% 9.9 0.4% 1.7 0.1% 10.5 0.3%

Total non-investment grade $ 199.2 5.8% $ 146.0 4.4% $ 201.0 6.7% $ 142.3 5.4% $ 210.7 6.6% $ 274.9 8.8%

Total fixed maturities $ 3,438.5 100.0% $ 3,289.1 100.0% $ 2,987.4 100.0% $ 2,652.7 100.0% $ 3,170.1 100.0% $ 3,122.1 100.0%

Investment Grade Securities:

Fixed Maturities $ 3,239.3 95.3% $ 3,143.1 94.8% $ 2,786.4 88.1% $ 2,510.4 85.9% $ 2,959.3 86.3% $ 2,847.3 74.3%

Preferreds 50.3 1.5% 60.0 1.8% 76.0 2.4% 65.8 2.3% 101.4 3.0% 128.0 3.3%

S-T Investments 61.2 1.8% 108.0 3.3% 293.1 9.3% 342.2 11.7% 363.1 10.6% 839.5 21.9%

Cash & Cash Equivalents 47.1 1.4% 5.9 0.2% 8.8 0.3% 3.8 0.1% 3.6 0.1% 19.8 0.5%

Total investment grade $ 3,397.9 100.0% $ 3,317.0 100.0% $ 3,164.3 100.0% $ 2,922.3 100.0% $ 3,427.4 100.0% $ 3,834.6 100.0%

Total investment grade to

total cash & investments 88.96% 88.88% 87.33% 87.29% 85.64% 85.58%

Limited Partnerships $ 166.9 $ 195.5 $ 212.7 $ 253.8 $ 317.0 $ 286.1

Limited partnerships to otal

cash & invested assets 4.37% 5.24% 5.87% 7.58% 7.92% 6.38%

Electric REV (Taxable Muni)

Insr-Life Bank

GO (Taxable Muni) Gas-Pipe

Food Proc Insr-P&C

CMBS Electrncs

Enrg-Indp REIT

Enrg-Intg Divfd Mfg

Retail Media-Dfd

Gas-Distr Railroads

Chemicals Pharmctls

Media-Cbl Aerospace

Metl/Mine Health

Info Tech Beverage

TSY Enrg-Srvc

Wireline Consumer

Wireless Auto Mfg

Tran Srvc Fin-Cnsmr

Fin-Divfd Supermkts

Bldg Prod Media-Oth

Enrg-Refg Foreign

ConstMach Insr-Hlth

Othr-FIN Paper

LocalAuth Ret-Drug

Lodging Services

Steel Othr-IND

Veh Parts SEQ

Restrnts LEAS

Publishng Broker

Gaming Envrnmntl

FLT Package

Home Bldg Airlines

Textiles AGY

Other PAC

Water HEL

SUP Leisure

Insr-Mult

• Pie chart gives

emphasis to the

broadly diversified

composition of the

core portfolio across

71 sectors

• The average sector

concentration was

1.4% at year-end

• Largest sector

concentration is

Electric Utilities;

represents 11.9%

Composition of Fixed Maturities &

Preferred Stock (Core Portfolio) by Sector



Composition of Core

Portfolio by Sector


Composition of

Core Portfolio by NAIC Rating

NAIC 1

48.6%

NAIC 2

45.6%NAIC 3

3.5%

NAIC 4

1.6%

NAIC 5

0.7%


• As of year-end

2011, 94.2% or

$3,239.3 million of

the core portfolio was

of investment grade

quality

NY

TX

MD

WI

FL

WA

HI

UTCOCT

OH

PA

NV

VA

AZ

GA

NJ

MS

NC

KY

MI

MA

AL

IN

MNCA

DE

NY TX

MD WI

FL WA

HI UT

CO CT

OH PA

NV VA

AZ GA

NJ MS

NC KY

MI MA

AL IN

MN CA

DE NH

NM SC

DC WY

TN VT

RI LA

OK AK


Taxable Municipal Bond PortfolioGeographically Diversified


• Portfolio highly diversified across 38 states with an average concentration of 2.6%

• Largest concentrations in NY, TX, MD, WI and FL representing 10.0%, 8.3%, 6.1%, 5.1% and 4.8%, respectively, or 34.3% of the total asset class

• Net of these states, the average concentration falls to less than 2.0%

2011 Composition of Taxable

Municipal Bond Portfolio by State


Taxable Municipal Bond Portfolio

Composition by Category and Sector

General

Obligation

Bonds

44.0%

Revenue

Bonds

56.0%

Composition

by Bond Category

State

22.4%

Local

21.6%

Transportation

15.3%Education

15.1%

Utilities

10.4%

Development

5.4%

Tax

4.1%

Service

3.1%

Leasing

1.0%Health

0.9%

Housing

0.8%

Composition

by Sector


Taxable Municipal Bond PortfolioAcross Ratings by Sector

$-

$20

$40

$60

$80

$100

$120

$140

$160

Inves

tmen

t b

y S

ecto

r b

y R

ati

ng (i

n m

illi

on

s)

S & P Rating

Housing

Health

Leasing

Service

Tax

Development

Utilities

Education

Transportation

Local

State


56

• Extremely high quality; NAIC 1 rating applicable to 94.0% of the $362.3 million portfolio; 152 bonds held

• Diversified composition across sectors indicated

• Well balanced between general obligation and revenue bonds


Limited Partnership (LP) Portfolio PerspectiveLP Statutory Fair Value and Ratio to Adjusted Policyholder Surplus (APHS)

• The LP asset class exposure down both nominally and as a percentage of APHS in 2011; as planned

• The statutory fair value (SFV) of the LP portfolio at year-end was $166.9 million and represented 43.4% of APHS

• Unfunded LP commitments were $41.7 million at year-end 2011

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

$300

$325

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

LP Statutory Fair Value LPSFV/APHS

LP

SF

V t

o A

PH

S

LP

SF

V (

in m

illi

on

s)

Infrastructure

17.9%

Oil & Gas

10.4%

Real Estate

5.5%

LBO/Merchant

Banking

34.4%

Restructuring

25.1%

Other

6.7%


Limited Partnership Portfolio Perspective

Composition of Current and Unfunded Commitments

Other

3.6%

Restructuring

23.7%

LBO/Merchant

Banking

22.2%

Real Estate

18.1%

Oil & Gas

14.3%

Infrastructure

13.5%

Hedge Related

4.7%


Current LP Portfolio

by Category

Unfunded Commitments

by Category

Total: $41.7 Million


Limited Partnership Portfolio Perspective, 12/31/2011

Highly Diversified Across 57 LPs in 9 Investment Categories

$37.1

$30.2

$22.6

$7.8$5.9

$39.5

$23.8

0%

5%

10%

15%

20%

25%

30%

0 5 10 15 20

Number of Limited Partnerships

Percen

tage o

f T

ota

l L

P P

ortf

oli

o

Limited

Partnership (LP)

Investment

Category

L

e

g

e

n

d

Category

Metrics

Statutory

Fair

Value (millions)

Number

of

LPs

Restructuring $ 39.5 9

LBO/Merchant 37.1 9

Real Estate 30.2 17

Oil & Gas 23.8 6

Infrastructure 22.6 3

Hedge Related 7.8 5

Other* 5.9 8

Total $166.9 57

Bubbles denote

proportional size of

LP statutory fair value

by investment category

* Includes debt/CBO, mezzanine/

senior debt & equity/secondary


Impact of MBS Re-ratesBlackrock Modeling NAIC Rate Designation, 12/31/2011

Market MV Percent Market MV Percent

NAIC Rating Book Value Value (MV) of Total Book Value Value of Total

NAIC 1 62.98$ 65.82$ 53.7% 111.85$ 118.53$ 96.8%

NAIC 2 32.70 36.42 29.7% 2.45 2.46 2.0%

Investment Grade 95.68$ 102.23$ 83.5% 114.30$ 120.99$ 98.8%

NAIC 3 11.24 11.14 9.1% 0.69 0.68 0.6%

NAIC 4 2.54 2.58 2.1% 0.77 0.80 0.7%

NAIC 5 6.30 6.52 5.3% 0.00 0.00 0.0%

NAIC 6 - - 0.0% 0.00 0.00 0.0%

Below Investment Grade 20.08$ 20.24$ 16.5% 1.46$ 1.48$ 1.2%

Total CMBS 115.76$ 122.47$ 100.0% 115.76$ 122.47$ 100.0%

After Blackrock ModelingBefore Blackrock Modeling

(Amounts in millions, except percentage data)

• Impact of MBS re-rates remains positive

• As the table below indicates, after implementation of the

Blackrock modeling methodology, 96.8% of MBS

exposures were rated NAIC 1

Sensitivity Analysis of BCARCore and Limited Partnership Portfolio Stress Tests

• Internally estimated BCAR at year-end 2011: 218%


Stress Test Results

AMB BCAR

Guideline

BCAR FSR

Core Portfolio Downward Rating Migration BCAR Sensitivity (1)

Stress Test Scenario I: 25% downward rating migration 185% A++

Stress Test Scenario II: 50% downward rating migration 161% A+

Limited Partnership Portfolio Write-down BCAR Sensitivity (2)

Stress Test Scenario III: 25% write-down 196% A++

Stress Test Scenario IV: 50% write-down 180% A++

(1) Assumes percentage of core portfolio that experiences an NAIC rating downward shift

(e.g., NAIC 1 falls to NAIC 2 , NAIC 2 falls to NAIC 3 and so forth) (2) Assumes percentage of limited partnership portfolio written down; does not reflect potential

corresponding tax benefits.

62

Presidential Life

Insurance Company

Actuarial Perspectives


Historical & Current Crediting Rates

Period Ended,

12/31/2008 12/31/2009 12/31/2010 12/31/2011

Deferred 4.54% 4.48% 4.40% 4.36%

Immediate 6.01% 6.01% 5.96% 5.94%

Combined 5.00% 4.95% 4.88% 4.83%


Statutory ReserveChanges by Product by Year

(Amounts in millions)

Period Ended,

Product 12/31/2008 12/31/2009 12/31/2010 12/31/2011

Deferred Annuities $ (166) $ 26 $ (29) $ (54)

Immediate Annuities (36) (12) (3) (48)

Single Premium UL and UL 1 1 (1) (6)

Traditional Life and Other 11 (20) 1 1

Total $ (190) $ (5) $ (31) $ (107)


Annuity Surrender Charge

and Liquidity Characteristics

(Amounts in millions)

Period Ended,

Product 12/31/2008 12/31/2009 12/31/2010 12/31/2011

Deferred Annuities without

Surrender Charge $ 1,168 $ 1,183 $ 1,191 $ 1,250

Deferred Annuities with

Surrender Charge 893 905 867 760

Immediate Annuities 937 925 922 874

Total $ 2,998 $ 3,013 $ 2,980 $ 2,884


Summary of Effective Duration

Period Ended, Assets Liabilities Difference

12/31/2007 4.9 4.8 0.1

6/30/2008 5.2 4.7 0.5

12/31/2008 4.7 4.8 -0.1

6/30/2009 4.9 5.3 -0.4

12/31/2009 4.9 5.3 -0.4

6/30/2010 5.3 5.7 -0.4

12/31/2010 5.6 5.8 -0.2

6/30/2011 5.7 5.7 0.0

12/31/2011 5.9 6.6 -0.7


Asset/Liability Matching AnalysisCash Flow Testing

Summary of Projection Results as of December 31, 2011

Present Value of Ending Market Surplus

(in millions)

Base Scenario

Interest Description of Present Value

Rate Interest Rate of Ending Market

Scenario Scenario Surplus

1 Level 108.4

2 Up 5% Over 10 Years 61.7

3 Up 5% Down 5% 39.2

4 Pop Up 3% 86.9

5 Down 5% Over 10 Years 96.5

6 Down 5% Up 5% 87.1

7 Pop Down 3% 96.3

8 Up 3% Over 10 Years 112.8

9 Pop Up 2% 117.4

10 Pop Up 1% 125.2


Deferred Book Value AnnuitiesMinimum Guaranteed Crediting Rates (MGCR)

$32.7

$4.5

$39.7

$899.3

$1.3

$563.8

$464.9

-10%

0%

10%

20%

30%

40%

50%

60%

0% 1% 2% 3% 4% 5% 6%

Per

cen

tag

e o

f B

oo

k V

alu

e D

efer

red

Acc

ou

nt

Va

lue

at

Yea

r-e

nd

2011

Minimum Guaranteed Crediting Rates

Bubbles Denote

Proportional Size of

2011 Account

Values (millions) at

MGCR

2011 Allocation of MGCR by % of Account Value

Percentage

of MGCR

Account Account

Values Values to

MGCR (in millions) Total

1.1% $ 32.7 1.6%

1.5% 4.5 0.2%

2.0% 39.7 2.0%

3.0% 899.3 44.8%

3.5% 1.3 0.1%

4.0% 563.8 28.1%

5.5% 464.9 23.2%

Total $ 2,006.3 100.0%

L

e

g

e

n

d


Reinsurance Programs and Retention

• Total ceded reinsurance policy reserves approximately

$20.7 million

• Less than 1% of direct policy reserves of $3.1 billion

• Term life’s ceded reserves approximately $11.2

million, with the last program 90% of death benefits ceded

out to four reinsurers

• Graded Benefit Life’s ceded reserves approximately $4.7

million

• Currently 50% of death benefits ceded to one reinsurer

70

Presidential Life

Insurance Company

Financial Projections and

Dividend Strategy

71

Presidential Life Corporation and Subsidiaries

2012-2016 Strategic Plan

Consolidated GAAP Statements of Income

(in thousands)

Actual Projected

Line Items 2010 2011 2012 2013 2014 2015 2016

REVENUES:

Insurance Revenues:

Premiums $ 19,316 $ 19,584 $ 20,300 $ 20,100 $ 22,900 $ 26,700 $ 30,400

Annuity considerations 51,198 9,636 12,000 23,000 47,000 70,000 132,000

Universal life and investment type policy

fee income 2,090 3,519 3,700 3,400 3,800 5,000 7,500

Equity in earnings (loss) on L.P.'s (5,450) 2,156 600 700 600 600 600

Net investment income 198,568 194,289 184,900 181,500 192,700 216,500 265,100

Realized investment gains, excluding other

than temporary impairment (“OTTI”) losses 28,302 45,585 13,600 12,500 12,400 11,300 9,000

Total OTTI losses recognized in earnings (1,392) (10,258) (4,700) (4,600) (4,600) (5,000) (5,700)

Other income 4,391 2,932 2,400 2,300 2,200 2,100 2,000

TOTAL REVENUES $ 297,023 267,443 $ 232,800 $ 238,900 $ 277,000 $ 327,200 $ 440,900

BENEFITS AND EXPENSES:

Death and other life insurance benefits $ 19,463 $ 19,947 $ 18,700 $ 18,000 $ 19,600 $ 22,100 $ 24,400

Annuity benefits 81,743 83,498 78,600 76,000 74,200 77,100 85,800

Interest credited to policyholders' account

balances 106,341 101,568 97,600 89,700 90,800 97,800 120,200

Interest expense on notes payable - - - - - - -

Other interest and other charges 1,280 1,603 1,000 1,000 1,000 1,000 1,000

Increase in liability for future policy benefits 20,811 (28,113) (22,100) (12,000) 13,900 36,100 93,800

Commissions to agents, net 7,156 4,340 12,100 36,100 55,100 81,300 121,200

Costs related to consent revocation

solicitation and related matters 1,525 - - - - - -

General expenses and taxes 18,584 22,468 23,700 24,300 25,500 26,600 28,600

Change in deferred policy acquisition costs 5,305 6,260 1,400 (21,300) (40,700) (65,800) (99,300)

TOTAL BENEFITS AND EXPENSES $ 262,208 $ 211,571 $ 211,000 $ 211,800 $ 239,400 $ 276,200 $ 375,700

Income (loss) before income taxes $ 34,815 $ 55,872 $ 21,800 $ 27,100 $ 37,600 $ 51,000 $ 65,200

Provision (benefit) for income taxes:

Current 14,120 19,792 7,500 9,400 13,000 17,600 22,500

Deferred (845) (2,858) 0 0 0 0 0

Total Provision (benefit) for income taxes: $ 13,275 $ 16,934 $ 7,500 $ 9,400 $ 13,000 $ 17,600 $ 22,500

NET INCOME $ 21,540 $ 38,938 $ 14,300 $ 17,700 $ 24,600 $ 33,400 $ 42,700

Earnings per common share, diluted $ 0.73 $ 1.32 $ 0.48 $ 0.60 $ 0.83 $ 1.13 $ 1.44

Weighted average number of shares

outstanding during the period, diluted 29,575 29,575 29,575 29,575 29,575 29,575 29,575

72

Presidential Life Corporation and Subsidiaries

2012-2016 Strategic Plan

Consolidated GAAP Balance Sheets

(in thousands except per share data)

Actual Projected

2010 2011 2012 2013 2014 2015 2016

ASSETS:

Investments:

Fixed Maturities, at amortized cost $ 3,209,803 $ 3,206,884 $ 3,217,300 $ 3,326,300 $ 3,636,300 $ 4,221,300 $ 5,285,300

Unrealized Gain in Fixed Maturites 182,195 313,871 315,700 300,300 277,200 246,500 215,700

Common stocks: 1,279 1,302 1,200 1,200 1,200 1,200 1,200

Derivatives 9,402 3,358 4,100 4,100 4,100 4,100 4,100

Real Estate 415 415 400 400 400 400 400

Policy Loans 19,607 18,442 17,100 16,100 15,300 14,300 13,500

Short-term investments 107,958 61,233 100,000 90,000 80,000 70,000 60,000

Limited partnerships 195,501 166,923 166,800 149,500 129,700 106,700 81,200

Total Investments $ 3,726,160 $ 3,772,428 $ 3,822,600 $ 3,887,900 $ 4,144,200 $ 4,664,500 $ 5,661,400

Cash and Cash equivalents 5,924 47,110 2,700 2,800 4,500 6,100 7,700

Accrued investment income 42,757 47,289 46,100 46,100 47,100 49,100 53,100

Amounts due from security transactions 49,005 23,880 1,300 1,300 1,300 1,300 1,300

Federal income tax recoverable 2,627 -

Deferred policy acqusition costs 57,298 41,746 39,000 62,400 105,400 175,300 279,400

Furniture and equipment, net 376 1,065 2,900 2,500 2,100 1,800 1,500

Amounts due from reinsurers 16,644 19,116 18,300 18,300 18,300 18,300 18,300

Other assets 1,495 1,649 3,300 3,300 3,300 3,300 3,300

TOTAL ASSETS $ 3,902,286 $ 3,954,283 $ 3,936,200 $ 4,024,600 $ 4,326,200 $ 4,919,700 $ 6,026,000

Policy Liabilities:

Policyholders' account balances 2,401,482 2,323,364 2,292,900 2,393,900 2,696,900 3,253,900 4,226,900

Future policy benefits:

Annuity 663,456 634,397 616,900 605,900 615,900 654,900 779,900

Life and Accident and Health 81,081 83,855 81,700 81,700 81,200 81,600 82,200

Other policy liabilities 11,718 20,633 14,600 18,000 12,700 14,100 16,300

Total policy liabilities $ 3,157,737 $ 3,062,249 $ 3,006,100 $ 3,099,500 $ 3,406,700 $ 4,004,500 $ 5,105,300

Deposits on policies to be issued 1,166 490 800 800 1,100 1,600 2,600

General expenses and taxes accrued 1,573 2,521 1,900 1,900 1,900 1,900 1,900

Federal income taxes payable 1,411 10,500 10,500 10,500 10,500 10,500

Deferred federal income taxes, net 45,157 82,355 88,500 83,100 75,000 64,200 53,400

Amounts due for security transactions - 268 - - - - -

Other Liabilities 14,745 17,045 15,600 15,600 15,600 15,600 15,600

TOTAL LIABILITIES $ 3,220,378 $ 3,166,339 $ 3,123,400 $ 3,211,400 $ 3,510,800 $ 4,098,300 $ 5,189,300

Capital Stock 296 296 300 300 300 300 300

Additional paid in capital 7,123 7,408 7,400 7,400 7,400 7,400 7,400

Accumulated other comprehe income (loss) 118,609 192,815 211,300 201,300 186,300 166,300 146,300

Retained earnings 555,880 587,425 593,800 604,200 621,400 647,400 682,700

TOTAL SHAREHOLDERS' EQUITY $ 681,908 $ 787,944 $ 812,800 $ 813,200 $ 815,400 $ 821,400 $ 836,700

TOTAL LIABILITIES

AND SHAREHOLDERS' EQUITY $ 3,902,286 $ 3,954,283 $ 3,936,200 $ 4,024,600 $ 4,326,200 $ 4,919,700 $ 6,026,000


Dividend Strategy

• Presidential Life Corporation expects to continue

its policy of paying regular cash dividends

• Payment of future dividends cannot be assured

• Dependent on future earnings, capital requirements

and the financial condition of the Company

• Company intends to up-stream statutory maximum

dividends to holding company

74

Presidential Life

Insurance Company

Appendix


Table of Contents

Section Page(s)

Financial Strength Rating Discussion and Analysis 76-87

Outstanding Litigation/Compliance Issues 88-89

76

Presidential Life

Insurance Company

Financial Strength Rating

Discussion and Analysis

Empirically Based FSR Analysis

Empirically based comparative analysis offers

invaluable insights into Presidential Life Insurance

Company’s warranted FSR upgrade relative to a

selected universe of mono-line ordinary annuity

companies rated by A.M. Best Company based on

2010 statutory filings (1)


77

(1) Data updated as of September 30, 2011 includes financial strength

rating, BCAR, ratings outlook and financial size category. Source: AMB Custom

Reports.

A++

A++

A+

A+

A+A+

A

A

A

A-

A-

A-

A-

A-B++ B++

B++

B+

B

B

B

BB-

C+0123456789

10111213141516171819202122232425

-6 -5 -4 -3 -2 -1 0 1 2 3

Nu

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f C

om

pan

ies

by F

SR

Acr

oss

FS

R B

CA

R D

evia

tion

Magnitude of FSR BCAR Deviation


78

Analysis of AMB’s FSR

Deviations to BCAR Guidelines(1)

• Analysis based on 82 mono-

line companies whose

ordinary annuity sales

averaged 81.7% of their total

NPW(2)

• Presidential Life’s FSR(3) of

B++ is four deviations below

the Life/Health BCAR

guidelines wherein a FSR of

A++ is warranted

• Graphic depicts magnitude of

PLIC FSR BCAR deviation

(1) Life/Health BCAR Guidelines; (2) AMB Custom Products; (3) Financial Strength Rating

Includes

PLIC

Matrix of FSR BCAR

Deviations across AMB FSR


79

Matrix of Ordinary Annuity of Companies' 2010 AMB FSR Deviations

to Published BCAR Guidelines across Actual AMB FSRs

AMB AMB FSR Deviations from Published BCAR Guidelines Grand

FSR -6 -4 -3 -2 -1 0 1 2 3 Total

A++ 7 1 8

A+ 20 2 3 4 29

A 14 2 2 18

A- 3 1 2 1 1 8

B++ 8 2 2 12

B+ 1 1

B 1 1 1 1 4

B- 1 1

C+ 1 1

Grand Total 1 9 5 17 24 13 6 6 1 82

-6-4

-4

-4 -4 -4 -4

-3

-3 -3

-2

-2 -2-2

-2 -2

-2

-2

-2

-1 -1

-1-1

-1

-1

-1

0

0

0

0

1

1

1

2

2

2

3

0123456789

10111213141516171819202122232425262728293031

IV V VI VII VIII IX X XI XII XIII XIV XV

Analysis of 2010 FSR BCAR

Deviations across AMB FSCs

• In the AMB Financial

Size Category range of

IX-XV, PLIC is the

only company with an

FSR 4 deviations below

the BCAR guidelines

• As the chart indicates,

the other 8 companies

with the same deviation

are all considerably

smaller


Financial Size Category (FSC)

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Acr

oss

FS

C b

y F

SR

BC

AR

Dev

iati

on

PL

IC F

SR

4 D

evia

tio

ns

bel

ow

BC

AR

Gu

idel

ines

Matrix of AMB FSCs Across FSR

BCAR Deviations to AMB Guidelines


Matrix of the Number of Companies' in the Ordinary Annuity Universe by 2010

Financial Strength Ratings Deviations to Published BCAR

Guidelines across AMB Financial Size Categories

AMB FSR Deviations from Published BCAR Guidelines Grand

APHS Range FSC -6 -5 -4 -3 -2 -1 0 1 2 3 Total

$5 - $10 IV 2 1 1 4

$10 - $25 V 1 3 2 1 7

$25 - $50 VI 1 1 1 3

$50 - $100 VII 1 1 1 1 1 5

$100 - $250 VIII 1 1 1 2 5

$250 - $500 IX 1 2 2 5

$500 - $750 X 2 1 3 6

$750 - $1,000 XI 5 5

$1,000 - $1,250 XII 1 2 3

$1,250 - $1,500 XIII 0

$1,500 - $2,000 XIV 2 2 2 2 8

$2,000 or Greater XV 2 13 9 3 4 31

Grand Total 1 0 9 5 17 24 13 6 6 1 82

Composition of Ordinary Annuity

Universe by AMB FSR & FSC

A+

29

35.4%A

18

22.0%

B++

12

14.6%

A++

8

9.8%A-

8

9.8%

B

4

4.9%B+

1

1.2%B-

1

1.2%C+

1

1.2%

Composition of Universe

by AMB FSRVI

3

3.7% XII

3

3.7% IV

4

4.9%

VII

5

6.1%

VIII

5

6.1%

IX

5

6.1%

XI

5

6.1%

X

6

7.3%V

7

8.5%

XIV

8

9.8%

XV

31

37.8%

Composition of Universe

by AMB FSC


82

2010 Total: 82 Company Population

PLIC

PLIC

0

0.0%

0

0.0%

0

0.0%

A.M. Best's

Composition by Outlook

Stable

74

90.2%

Negative

7

8.5%

Positive

1

1.2%

Composition by Outlook and FSR for Ordinary

Annuity Company Universe as of 09/30/2011


Total: 82 Company Population

8

29

18

8

12

1

4

1 1

0

5

10

15

20

25

30

35

A++ A+ A A- B++ B+ B B- C+

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A.M. Best’s Financial

Strength Ratings Distribution

Analysis of the Ordinary Annuity(OA)

Universe of Companies with FSRs of “B++”

Compared to Presidential Life Insurance Company


84

OA/ FSR BCAR Statutory Operating Return on Equity (2) AMB FSR

Company Name FSC NPW BCAR Deviation 2010 2009 2008 2007 Average Outlook

Universal Life Ins Co. (PR) V 89% 221 -4 7.1% 10.0% 51.9% -11.7% 14.3% Stable

Presidential Life Ins Co. IX 78% 182 -4 10.0% 7.8% 13.1% 16.4% 11.8% Stable

Fidelity & Grty Life Ins Co. XI 67% 149 -2 34.5% 7.4% 9.0% -6.1% 11.2% Stable

Fidelity & Grty Life Ins (NY) XI 92% 149 -2 9.0% 6.1% 11.2% 14.0% 10.1% Stable

Security Benefit Life Ins Co. X 79% 160 -3 11.2% 7.7% -4.9% 5.5% 4.9% Stable

Charter National Life Life Ins Co. V 99% 999 -4 3.9% 4.3% 5.2% 6.0% 4.9% Stable

Liberty Life Insurance Co. VIII 79% 201 -4 0.7% -4.0% 6.9% 9.8% 3.3% Stable

Investors Insurance Corp. VI 100% 185 -4 11.2% -35.0% 15.7% 15.4% 1.8% Stable

Great American Life Assr Co. IV 100% 999 -4 1.6% -7.6% 4.5% 5.5% 1.0% Stable

Amer Retirement Life Ins Co. IV 68% 999 -4 0.0% -1.0% 2.1% 1.7% 0.7% Stable

First Security Benefit Life Ins X 100% 160 -3 10.2% 10.0% -16.3% -2.2% 0.4% Stable

EMC National Life Co. VII 59% 209 -4 41.9% -115.5% -50.4% -3.0% -31.7% Stable

Average 11.8% -9.2% 4.0% 4.3% 2.7%

Median 9.5% 5.2% 6.0% 5.5% 4.1%(1) Sources: FSR and BCAR: A.M. Best's Custom Reports; All other data: SNL Financial (derived from

statutory filings)(2) Statutory net gains from operations divided by average

policyholder surplus

Note: According to AMB Custom Reports, companies with a

999 BCAR indicates the calculated ratio surpasses 1000.

Analysis of the Ordinary Annuity(OA) Universe of

Companies with FSRs of “A-” or Greater within FSCs

of IX-XIV Compared to Presidential Life Insurance Company

Presidential Life Insurance Company 85

Group OA/ FSR BCAR Statutory Operating Return on Equity

Company Name FSR (g) FSC NPW BCAR Deviation 2010 2009 2008 2007 Average Outlook

USAA Life Insurance Co. A++ XIV 60.2% 247 0 19.8% 14.4% 12.3% 15.1% 15.4% Stable

Great American Life Ins Co. A XI 94.0% 208 -2 16.5% 9.1% 21.1% 11.7% 14.6% Stable

Life Insurance Co. of the SW A g X 77.6% 213 -2 20.4% 20.4% 0.8% 15.8% 14.3% Stable

State Life Insurance Co. A+ g XII 59.6% 241 -1 7.3% 14.9% 19.1% 15.5% 14.2% Stable

Horace Mann Life Insurance Co. A IX 68.4% 180 -2 16.6% 13.2% 11.5% 11.8% 13.3% Stable

Presidential Life Ins Co. B++ IX 78.2% 182 -4 10.0% 7.8% 13.1% 16.4% 11.8% Stable

Amer Equity Invt Life Ins Co. A- XIV 99.7% 201 -3 14.5% 15.4% 11.2% 2.1% 10.8% Stable

Symetra Life Insurance Co. A XIV 63.9% 221 -2 12.3% 10.0% 8.3% 10.9% 10.4% Stable

Ohio National Life Ins Co. A+ XII 80.5% 241 -1 19.8% 18.1% -4.8% 5.5% 9.6% Stable

USAA Life Insurance Co. of NY A++ g XIV 69.4% 247 0 13.4% 9.0% 9.1% 6.6% 9.5% Stable

Auto-Owners Life Insurance Co. A+ IX 72.1% 213 -1 6.0% 5.7% 7.5% 9.2% 7.1% Stable

National Western Life A XI 57.5% 268 -2 8.8% 10.6% 4.1% 4.2% 6.9% Stable

Farm Bureau Life Ins Co. of MI A IX 60.9% 312 -2 6.3% 5.5% 3.6% 7.4% 5.7% Stable

Annuity Investors Life Ins Co. A g XI 88.5% 208 -2 13.4% 10.6% -4.2% 0.5% 5.1% Stable

Fidelity Invts Life Ins Co. A+ X 98.9% 574 -1 9.1% 1.8% 0.1% 7.7% 4.7% Stable

Centurion Life Insurance Co. A XII 87.2% 999 -2 4.2% 4.1% 5.2% 4.6% 4.5% Negative

Frst Symetra Natl Life Ins Co. A g XIV 83.4% 221 -2 12.8% -0.2% -6.8% 11.0% 4.2% Stable

Empire Fidelity Invts Life Ins A+ g X 99.1% 574 -1 4.6% 3.4% 1.5% 6.2% 3.9% Stable

Integrity Life Insurance Co. A+ g X 99.8% 274 -1 9.0% -0.8% -3.2% 2.8% 1.9% Stable

National Integrity Life Ins Co A+ g IX 100.0% 274 -1 13.7% 7.5% -21.1% 7.0% 1.8% Stable

Penn Mutual Life Insurance Co. A+ XIV 61.3% 328 -1 1.0% 5.5% -0.2% 0.5% 1.7% Stable

COUNTRY Investors Life Assr Co A+ XIV 75.9% 348 -1 2.8% 1.2% 2.7% -1.0% 1.4% Stable

Amer Eqty Invt Life Ins Co. NY A- g XIV 100.0% 201 -3 -6.4% -18.7% 4.3% 3.7% -4.3% Stable

Analysis of the Ordinary Annuity(OA)

Universe of Companies within the XV FSC

Compared to Presidential Life Insurance Company

Presidential Life Insurance Company 86

OA/ FSR BCAR Statutory Operating Return on Equity

Company Name FSR Group NPW BCAR Deviation 2010 2009 2008 2007 Average Outlook

Protective Life & Annty Ins Co A+ g 90.6% 228 -1 22.3% 23.1% 14.8% 23.1% 20.8%Stable

Jackson National Life A+ g 85.9% 158 1 34.7% 36.3% -7.4% 14.0% 19.4%Stable

ING USA Annuity Life Insurance A g 80.7% 150 0 51.0% 49.4% -29.5% 1.8% 18.2%Negative

Thrivent Life Insurance Co. A++ g 94.4% 247 0 14.1% 9.6% 14.4% 29.9% 17.0%Stable

RiverSource Life Insurance Co. A+ 81.0% 279 -1 33.8% 60.9% -44.3% 17.2% 16.9%Stable

MetLife Insurance Co. of CT A+ g 58.0% 138 2 10.5% 12.9% 15.0% 25.3% 15.9%Stable

Trnsam Life Ins Co. of NY A+ g 86.7% 202 -1 17.0% 37.0% -22.1% 30.9% 15.7%Stable

Protective Life Insurance Co. A+ 59.0% 228 -1 13.2% 32.2% -5.2% 22.1% 15.6%Stable

RiverSource Life Ins Co. of NY A+ g 77.0% 279 -1 20.9% 40.7% -14.9% 11.3% 14.5%Stable

MetLife Investors Insurance Co A+ g 99.6% 138 2 34.0% 16.2% -8.4% 13.1% 13.7%Stable

Allianz Life Insurance Co. A 95.4% 170 -1 24.7% 10.8% 12.0% 4.9% 13.1%Negative

Presidential Life Ins Co. B++ 78.2% 182 -4 10.0% 7.8% 13.1% 16.4% 11.8%Stable

Teachers Ins & Annty Assn. A++ 62.5% 223 0 11.7% 14.2% 6.6% 9.5% 10.5%Stable

Western National Life Ins Co. A g 99.9% 183 -2 13.5% 10.2% 6.8% 9.5% 10.0%Stable

SunAmerica Life Insurance Co. A g 75.2% 183 -2 2.2% 10.6% 10.7% 16.3% 10.0%Stable

Transamerica Advs Life Ins Co. A+ g 73.7% 202 -1 29.7% 59.5% -82.2% 27.6% 8.7%Stable

Western-Southern Life Assr Co. A+ g 83.7% 274 -1 10.1% 9.9% 1.0% 12.6% 8.4%Stable

Brooke Life Insurance Co. A+ 95.7% 158 1 7.8% 7.5% 9.3% 7.0% 7.9%Stable

New York Life Ins & Annty Corp A++ g 72.4% 218 0 11.8% 8.2% -4.2% 14.1% 7.5%Stable

Guardian Ins & Annty Co. A++ g 67.4% 278 0 17.5% 16.2% -14.8% 7.6% 6.6%Stable

TIAA-CREF Life Insurance Co. A++ g 69.0% 223 0 7.2% 4.0% 3.8% 5.5% 5.1%Stable

North American Co. for L&H Ins A+ g 66.3% 243 -1 10.0% 4.9% 1.1% 0.9% 4.2%Stable

Pacific Life & Annuity Co. A+ g 96.3% 208 -1 12.7% 34.3% -32.5% 1.7% 4.0%Stable

Aviva Life & Annuity Co. A 83.9% 145 0 8.6% 9.6% -5.7% 1.1% 3.4%Negative

Pruco Life Insurance Co. of NJ A+ g 77.8% 173 0 28.0% 1.9% -15.8% -5.3% 2.2%Stable

Pacific Life Insurance Co. A+ 59.5% 208 -1 12.7% 15.6% -36.5% 10.2% 0.5%Stable

Pruco Life Insurance Co. A+ g 89.2% 173 0 28.3% 23.4% -78.0% 6.4% -5.0%Stable

Allianz Life Ins Co. of NY A g 98.7% 170 -1 27.0% 51.6% -118.7% 4.6% -8.9%Negative

Sun Life Ins & Annty Co. of NY A+ g 70.3% 198 -1 19.3% 12.8% -60.4% -12.7% -10.2%Stable

Berkshire Hathaway Life Ins Co A++ 100.0% 168 1 -33.4% -95.4% 8.4% 6.5% -28.5%Stable

First MetLife Investors Ins Co A+ g 91.1% 138 2 -12.6% -5.0% -87.1% -80.4% -46.3%Stable

MetLife Investors USA Ins Co. A+ g 89.2% 138 2 3.3% 1.1% -66.4% -189.3% -62.8%Stable

Empirical Analysis Summary

• PLIC’s 2007-2010 average Best’s ROE is among

the highest and most stable relative to all

segmented populations and collectively

• The FSR BCAR deviation of PLIC is numerically

inconsistent relative to the ordinary annuity

company universe rated by AMB based on the

empirically based analysis to all integral metrics

• BCAR, RBC, statutory earnings consistency, stable

profitability and financial size category


87

88

Presidential Life

Insurance Company

Outstanding Litigation/

Compliance Issues


Outstanding Litigation/Compliance Issues

• From time to time, Presidential Life is involved in litigation relating to claims arising out of its operations in the normal course of business

• Presidential Life is not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on the Corporation’s financial condition or results of operations

Economy & Finance

2012 amb final_02_22_2012