ULLICO Continues Positive Earnings in Q3

ULLICO Inc. Reports Continued Positive Earnings Results Driven By Strong Sales For the Third Quarter 2008 including Pre-Tax Operating Income of $4.6 million and Net Income of $2.1 Million.

WASHINGTON,DC,November 14,2008 - ULLICO Inc.,the labor owned multi-line holding company offering insurance and financial products and services,today reported pre-tax operating income of $4.6 million for the current quarter ended September 30,2008,compared to $1.9 million in the prior year's quarter. Net income for the current quarter was $2.1 million,compared to a net loss of $19.4 million in the prior year's quarter,due to non-recurring losses of $22.3 million in the third quarter of 2007.

Highlights for the quarter:

• The Property and Casualty Business Unit generated strong pre-tax earnings of $2.9 million,compared to $2.0 million for the same period last year. Core earnings on the Fiduciary and Union Liability lines continue to exceed expectations due to sound underwriting. Revenue from continuing lines was $13.9 million,an increase of 50% over the same quarter in 2007. The increase was a result of continued strong sales in Fiduciary Liability,Union Liability,and Workers' Compensation business,and the continued successful expansion of the Commercial lines business.
• The Life and Health Unit contributed pre-tax earnings of $2.6 million from continuing operations,compared to $1.4 million for the same period last year. Earnings in the quarter were driven by favorable mortality in our Group Life and Direct Marketing lines of business. Revenue from continuing lines was $35.0 million in the current quarter,an increase of 8% over the same quarter of 2007. Driving the revenue increase is strong sales for the Stop Loss business which,through September 30,2008,have already achieved the level attained for the full year of 2007.
• Retirement Services continues its momentum with pre-tax earnings at $7.0 million,compared to $6.2 million for the same period last year. The earnings were driven by continued growth in assets under management within our flagship Separate Account J,which grew from $3.2 billion at September 30,2007 to $3.6 billion at September 30,2008,and strong profit distributions on the Company's residual limited partnership investments. In addition,the Company reported $0.7 million of fee revenue from its new privately offered real estate equity fund that targets investments in Sunbelt states.

The results above include a pre-tax charge for the write down of an investment in Fannie Mae preferred stock in the amount of $3.3 million ($2.2 million for Retirement Services; $1.1 million for Property & Casualty). The Company has no investment in sub prime or Alt-A mortgage-backed securities and minimal exposure to the commercial financial institutions struggling to meet their obligations.

Consolidated operating income was impacted by an increase in general expenses resulting from continuing investments in new product and marketing initiatives and related support infrastructure. The Company recorded federal income tax expense in the amount of $1.0 million for the quarter ending September 30,2008. As of December 31,2007,the Company determined that a valuation allowance was no longer required as a contra-asset to the deferred income tax asset. There was a $1.0 million federal income tax benefit recorded for the quarter ending September 30,2007.

In addition,the Company recorded a $1.3 million pre-tax charge related to the restructuring of our fully insured Group Health business,which has not been actively marketed since late 2006. This transaction was classified as non-recurring.

Total premium and fee revenue for the quarter was $61.3 million compared to $66.4 million in the prior year's quarter. Revenue on the Company's continuing lines was $59.4 million compared to $51.1 million last year,an increase of 16%. Revenue from the exited lines,which primarily includes the Company's fully insured Group Health business,declined to $1.9 million from $15.3 million in the prior year's quarter.

Year-to-Date Consolidated Results

Year-to-date consolidated operating income was $12.4 million compared to $10.9 million in the prior year. The year-to-date variance resulted from increased Property and Casualty operations profitability driven by strong underwriting and strong sales growth,increased fee revenue due to growth in assets under management within Separate Account J and profit distributions on the Company's residual limited partnership investments. The positive variance was partially offset by higher claim activity in our Group Life business,Stop Loss profitability returning to a targeted level,and increased expenses related to our investment in growth initiatives discussed above.

Year-to-date consolidated net income was $7.1 million compared to a net loss of $10.8 million in the prior year,primarily due to non-recurring losses of $22.6 million through September 30,2007. The current year results include federal income tax expense of $3.7 million,whereas,there was a $1.0 million federal income tax benefit recorded for the period ending September 30,2007.

Premium and fee revenue for the nine months declined from $201.7 million in 2007 to $190.6 million in 2008. Revenue on the Company's continuing lines of business increased 14% to $170.8 million,despite softening market conditions. The overall decline in revenue from the prior year is attributable to the Company's 2006 decision to no longer actively market fully insured Group Health insurance to the Taft-Hartley marketplace. As a result,our in force health insurance business is declining as customers transition to other providers.

Mark Singleton,ULLICO CEO stated,"The focus and discipline we have established in recent years has allowed ULLICO to substantially avoid the problems paralyzing much of the industry at this time. We have been able to continue to build our diversified portfolio of Labor-focused products without distraction,which in turn is driving accelerated growth in core revenue and profit."

Chairman Joseph Hunt stated,"I am very proud of our results this year. The success we are experiencing,in contrast to the losses and capital issues of our competitors,is a testament to the hard work of the Board of Directors and management to build ULLICO the right way."

Quarterly Financial Results at a Glance

2008 Year-To-Date Results at a Glance