DFG Delphi Financial Grp., Inc.

A.M. Best Co. has affirmed the issuer credit rating (ICR) of �bbb� of Delphi Financial Group, Inc. (Delphi Financial) (Wilmington, DE) (NYSE:DFG). A.M. Best also has affirmed the financial strength rating (FSR) of A (Excellent) and ICRs of �a� of Delphi Financial�s primary life insurance subsidiaries, Reliance Standard Life Insurance Company (Reliance Standard) (Chicago, IL) and First Reliance Standard Life Insurance Company (New York, NY). Additionally, A.M. Best has affirmed all debt ratings of Delphi Financial, Delphi Funding L.L.C. (Delaware) and Reliance Standard Life Global Funding (Illinois). The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.) These rating affirmations reflect the continued favorable operating results reported by Delphi Financial and its life insurance subsidiaries, as well as the organization�s established niche in the small to mid-sized employee benefit market, which focuses on group disability income and life product offerings. Reliance Standard, the principal life insurance subsidiary of Delphi Financial, has reported consistent growth in its book of business, as well as an increased market presence. The life operations, which have demonstrated favorable results in a competitive market, gain diversification through their traditional fixed individual annuity products along with a newly introduced indexed annuity product. A.M. Best believes that Reliance Standard�s core small case group disability and life products will likely encounter increasing competitive challenges going forward as more carriers are beginning to focus on its market niche. However, both the absence management and the integrated disability service offerings create differentiation as well as cross-selling opportunities. Also, the company continues to emphasize its voluntary disability sales in addition to the promotion of its recently added limited benefit medical offering. Although Delphi Financial has a less aggressive investment philosophy than in the past, it recently reported losses in its trading account due to volatile market conditions. The trading account, CDOs and moderate sub-prime and alt-a mortgage holdings, which combined comprise approximately 7% of Delphi Financial�s investment portfolio, bears watching. A.M. Best notes the current favorable capitalization of the organization, which offsets this risk somewhat. As with all disability income writers, Reliance Standard continues to face the challenge of operating profitably in an extended low interest rate environment and the potential of a weaker economy. The ICR of �bbb� has been affirmed for Delphi Financial Group, Inc. The FSR of A (Excellent) and the ICRs of �a� have been affirmed for the following subsidiaries of Delphi Financial Group, Inc.: Reliance Standard Life Insurance Company First Reliance Standard Life Insurance Company The following debt ratings have been affirmed: � Delphi Financial Group, Inc.-- -- "bbb" on $143.8 million 8% senior unsecured notes, due 2033 -- "bb+" on $175.0 million 7.376% junior subordinated debentures, due 2037 � Delphi Funding L.L.C.-- -- "bbb-" on $100 million 9.31% capital securities, due 2027 � Reliance Standard Life Global Funding-- -- "a" on $100 million medium-term notes (MTNs) � The following indicative ratings have been affirmed for debt securities available under the shelf registration: � Delphi Financial Group, Inc.-- -- "bbb" on senior unsecured debt -- "bbb-" on subordinated debt -- "bbb-" on preferred securities -- "bb+" on preferred stock 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.