Fitch Affirms Trustmark's Ratings Following Deal Announcement

01/27/2010

CHICAGO, Ill. – (BUSINESS WIRE) – Fitch Ratings has affirmed the 'A-' Insurer Financial Strength (IFS) ratings of Trustmark Insurance Company (Trustmark Insurance) and Trustmark Life Insurance Company (Trustmark Life). Fitch rates these companies (collectively known as Trustmark) on a group basis given their shared senior management, investment management and brand identification. The Rating Outlook is Stable.

Today's rating action follows Trustmark's announced intent to acquire Health Fitness Corp. (Health Fitness) for $97 million in cash and reflects Fitch's expectations for the transaction's impact on Trustmark's capitalization and cash flow, as well as the acquired company's alignment with Trustmark's growth strategy. Fitch's review of the transaction considered the amount of capital borrowed and dividended from the operating companies to fund the purchase price. The ratings also take into account the growth of non-risk businesses within Trustmark's organizational structure as its traditional health benefits businesses become smaller.

Fitch's ratings on Trustmark are supported by the combined company's good earnings performance, good quality asset portfolio, and strong risk-adjusted capitalization. Trustmark's performance has been favorably affected by management's focus on premium rate adequacy, expense controls, and its decision to reduce or eliminate non-productive segments.

Fitch's primary rating concern involves Trustmark's modest competitive position in the health insurance market, where size and network strength have become crucial to maintaining market position. Premium volume in the company's health insurance business continues to decline and Fitch believes that this business is likely to continue to decline in size. The ratings also consider potential difficulty with pricing accuracy as the company's group health business continues to reduce in size, as well as strong competition in the health insurance and managed care sector. As with all companies operating in the health insurance sector, Fitch's ratings on Trustmark incorporate an element of uncertainty around the outcome of various aspects of health insurance reform currently being debated in Washington.

Lake Forest, Illinois-based Trustmark provides a variety of medical and voluntary benefit products and services to the group and worksite markets in addition to offering claims and administrative services through its affiliated TPA. At Sept. 30, 2009, Trustmark and Trustmark Life reported combined total assets of $1.5 billion and capital and surplus of $424 million.

Fitch has affirmed the following ratings with a Stable Outlook:

Trustmark Insurance Company

Trustmark Life Insurance Company

--IFS at 'A-'.

Additional information is available at www.fitchratings.com.