2003 GILICO Financial Results

GUARANTY INCOME LIFE INSURANCE COMPANY

Press Release
GILICO Announces 2003 Financial Results

February 27, 2004, Baton Rouge, Louisiana - Guaranty Income Life Insurance Company ("GILICO") announced today their 2003 financial results. John Lancaster, President, stated, "We are pleased with another successful year of achievement at Guaranty. In tough economic times we have continued to reach new records of assets, growth and diversification in direct premium. Our strategy of realizing gains in our portfolio to offset lower interest yields exceeded our expectations. The lower interest rates throughout 2003 allowed GILICO to realize capital gains of $7 million while significantly reducing exposure to below investment grade corporate bonds. We completed the year with an investment portfolio that is of the highest quality ever."

GAAP results included net income of $1.5 million compared to a loss of $881,000 in 2002. Assets were $415 million, representing a 20% increase over assets of $346 million at year end 2002. Capital and surplus, excluding unrealized gains and losses, was $30 million versus $28 million in 2002.

Statutory results reflected a net loss of $582,122 for 2003 compared to a net loss of $3.1 million in 2002. Admitted assets grew to $386 million from $319 million. Adjusted capital and surplus, including AVR and IMR, rose to $24.5 million, a 22% increase over the 2002 level of $20.1 million. This capital growth and continued emphasis on high quality bonds in our investment portfolio has improved our Risk Based Capital Ratio to 446% compared to 332% at December 31, 2002. Direct premiums were $81.5 million, the second most successful year of sales in the company's history.

General expenses have remained level at $3 million per year over the past several years while assets have increased significantly. GILICO now has "lower average expense levels" than our insurance industry peers. This trend continues to validate the strength of our organization and the ability to add significant new business without increasing expenses.

Our bond portfolio has reached a high quality rating of AA+ while maintaining a short term duration of approximately five years. Cash, short term investments and bonds combine to provide a liquid portfolio representing 97% of invested assets. At December 31, 2003, below investment grade investments represent only 1.5% of invested assets. During the year we reduced our exposure to mortgages and real estate to less than 2% of invested assets.

Our ultimate parent, Guaranty Corporation (GC), continues to provide support for the company's growth initiatives. During 2003, GC contributed additional capital to the company of $400,000. GC has contributed capital of $4.7 million in the past three years.

Mr. Lancaster said, "GILICO has grown faster than most insurance companies during the last five years. In spite of the terrorist attacks in 2001 and the stock market decline from 2000 to 2002, which greatly affected the entire U.S. economy, GILICO's financial condition is the strongest ever. The Federal Reserve Board of Governors has dealt with these major economic events by lowering interest rates in an unprecedented fashion. This lowering of the "Fed Funds Rates" that the Fed charges banks to borrow money has helped the overall economy to improve, especially by allowing many people to refinance their homes and other debt. It has also benefited auto sales, furniture and other larger items that consumers purchase using "zero percent financing." Corporations have also been able to refinance their debt at lower interest rates. However, the current Fed Funds Rate of 1.0% is the lowest since 1958 [46 years]. These low rates have brought the credited rates on C.D.s, money market accounts and annuities to extremely low levels. During 2004, we expect the U.S. economy to improve and interest rates to rise modestly. Even in this difficult economic environment, GILICO has expanded through exceptional Marketing Organization relationships. With our high quality, short duration and liquid investments, GILICO is well positioned to benefit from an improving economy. We will continue to work hard in our 78th year to offer our agents and policyowners innovative products and excellent service!"

Guaranty Income Life Insurance Company was founded in 1926 and is a Legal Reserve insurance company currently licensed in 31 states. In addition to cost-effective life insurance, long-term care and annuity programs, Guaranty offers products and services to help families meet their financial needs of wealth protection and wealth creation today and in the future.

Minimum Viewing Requirements: Windows 95 or higher; 800x600 screen resolution; Internet Explorer/Netscape/AOL version 5 or higher