For Immediate Release

OLDWICK, N.J., Jun 21, 2006 (BUSINESS WIRE) -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A++ (Superior) of Pacific Life Insurance Company (PLIC) (Nebraska) and its wholly-owned subsidiary, Pacific Life & Annuity Company (together known as Pacific Life) (Arizona).A.M. Best has also affirmed the issuer credit rating (ICR) of "aa+" of PLIC and assigned an ICR of "aa+" to its wholly-owned subsidiary. In addition, A.M. Best has affirmed the (ICR) of "a+" and debt ratings of PLIC's parent holding company, Pacific LifeCorp (Newport Beach, CA). Concurrently, A.M. Best has assigned a debt rating of "aa+" to PLIC's second separate account funding agreement-backed securities program (FABS). The outlook for all ratings is stable. (See link below for a detailed listing of all ratings.)

The ratings of Pacific Life reflect its superior risk-adjusted capitalization, excellent liquidity position and prudent financial and risk management practices, as well as the prominent position it maintains as a provider of choice in the most affluent market segments for individual life insurance, variable annuities and institutional investment products. A.M. Best also notes the strength of company management, which is evidenced by its disciplined and highly focused business strategies. Pacific Life has consistently achieved revenue growth that exceeds industry averages, yielding healthy levels of operating cash flow supported by a stable liability structure, a diversified investment portfolio, extensive liquidity sources and moderate financial leverage. In addition, Pacific Life's risk-adjusted capital position has benefited from the disposition of much of its beneficial ownership interest in Allianz Global Investors (formerly PIMCO Advisors, L.P), as well as from the 2005 sale of its group insurance business.

These strengths are partly offset by the ongoing potential for earnings volatility due to the nature of Pacific Life's business mix. Given its competitive position among the market leaders in variable life and variable annuities, Pacific Life has a disproportionate exposure to the equity markets relative to the rest of the industry.

Pacific Life's core universal and corporate owned life insurance (COLI) products, as well as its institutional investment products, are also sensitive to further changes in interest rates, economic conditions and unfavorable legislation. Furthermore, although balance sheet risk has generally declined with the recent improvement in the credit markets, the company still maintains a larger exposure to private placement bonds than most of its competitors. However, Pacific Life's broad product portfolio, its diversified and highly productive distribution relationships and solid investment management capabilities largely mitigate concerns in these areas. While A.M. Best believes Pacific Life's strong financial and risk management practices offer some insulation from unfavorable market conditions, the potential for earnings volatility and capital and surplus erosion remains a risk to its long-term financial strength.

A.M. Best notes that Pacific LifeCorp has entered certain non-traditional insurance businesses over the past several years, including commercial aircraft leasing and asset financing, which exposes the organization to incremental industry specific risks and certain limited recourse obligations. However, A.M. Best also notes that management has considerable expertise in these businesses and that they represent material sources of non-equity market cash flows and earnings.

PLIC's newly-rated separate account FABS program was established to issue $61 million of floating rate notes to institutional investors in the United States in accordance with Rule 144A of the Securities Act. The issuer of the notes, Pacific Pilot Funding II (PPF), is a special purpose trust created under the laws of the Cayman Islands. PPF has used the net proceeds from the sale of the notes to acquire a separate account funding agreement issued by PLIC, which is domiciled in and subject to the laws of Nebraska.

Based on A.M. Best's analysis of this separate account FABS structure, the program and notes will carry PLIC's issuer credit rating of "aa+". This reflects the general account guarantee provided by PLIC and that the claims of holders of funding agreements would be treated pari passu with claims under the company's insurance policies and annuity policies or contracts.

For a complete listing of Pacific LifeCorp's FSRs, ICRs and debt ratings, please visit www.ambest.com/press/062106pacificlife.pdf.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.

SOURCE: A.M. Best Co.

A.M. Best Co.
Public Relations
Jim Peavy, 908-439-2200, Ext. 5644; james.peavy@ambest.com
Rachelle Striegel, 908-439-2200, Ext. 5378; rachelle.striegel@ambest.com

Analysts
Thomas Rosendale, 908-439-2200, Ext. 5201; thomas.rosendale@ambest.com
Andrew Edelsberg, 908-439-2200, Ext. 5182; andrew.edelsberg@ambest.com