Foresters and Unity Life of Canada today announced completion of the agreement under which Unity Life becomes a wholly owned subsidiary of Foresters, and will represent Foresters in the Canadian market as Unity Life of Canada, a Foresters Company.

Today’s announcement follows the April 2 completion of the sponsored demutualization of Unity Life, which recently received approval from eligible Unity Life policyholders and Canadian regulatory authorities, and a share transaction between the two parties. The $50 million in proceeds from the share transaction will be paid to eligible policyholders in exchange for their voting control and their share of the value of Unity Life.

“This is a very important development for Foresters. Our partnership with Unity Life, with its national coverage and outstanding marketing and distribution capabilities, will significantly strengthen our Canadian business and allow us to achieve our strategic goals for Canada of improving our financial results, growing our membership and strengthening our members’ communities,” stated George Mohacsi, Foresters president and CEO.

“Our partnership with Foresters represents a meshing of the complementary strengths of the two organizations and will provide the strong financial backing and access to capital we need to realize our Canadian growth strategy,” added Tony Poole, President and CEO of Unity Life,

Commencing in mid-April, Unity Life will make cash payments to up to 15,000 eligible Unity Life policyholders. The average payment to eligible policyholders will be $3,300, with the exact amount based on factors such as the size, policy cash value and duration of their policies. The insurance coverage, policy values, premiums and the right to receive experience dividends of Unity Life policyholders will be unaffected by the sponsored demutualization.

Foresters future Canadian sales and marketing operations will be conducted exclusively through Unity Life. Unity Life customers will have access to the product lines of both Foresters and Unity Life. New customers who purchase eligible individual life insurance products from Unity Life will become full voting members of Foresters and enjoy all Foresters member entitlements and benefits. Additionally, Foresters will take on some Unity Life corporate activities that are presently outsourced.

Foresters Canadian financial representatives have been offered distribution contracts with Unity Life. Many of these representatives have become independent agents with Unity Life and will continue to serve Foresters members in their communities as before. For Foresters members whose current financial representative has not transitioned to Unity Life, a new representative will be appointed to service their business.

Insurance company ratings firm A.M. Best Co. announced this afternoon it has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating (ICR) of “a-“ to Unity Life of Canada. The outlook for both ratings is stable.

As well, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a+” of Foresters. The outlook for these ratings is also stable.

The rating agency said that Unity Life’s ratings “reflect its adequate risk-adjusted
capitalization, diversified business profile and financial backing of its new parent, Foresters.” It added that the firm will enable Foresters to enhance its presence in the Canadian life insurance market, which has been modest compared to its positions in the U.S. and U.K. markets. On the negative side of things, A.M. Best notes Unity Life’s challenges to continue to improve its operating performance and the high level of competition in the Canadian insurance market.

Where Foresters is concerned, A.M. Best said the ratings “are based on its long established fraternal presence in Canada, diversified business profile that includes life insurance and asset accumulation businesses in the United States, United Kingdom and Canada and a strong risk-adjusted capitalization position, which includes access to free surplus to support new business initiatives.”

For Foresters the offsetting factors are its modest earnings performance due to
continuing expense overruns, modest success in growing its Canadian life insurance segment, unprofitable U.S. operations on a statutory basis primarily due to required deficiency reserves associated with strong terms sales in 2006 and 2007.