FIELD MEMO. 93.2% Bonds 3.0% Other Investments 2.1% Stocks 1.3% Policy Loans 0.4% Cash & Short Term Investments

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1 October 6, 2008 To: North American Annuity Agents From: North American Annuity Division Re: Financial Update FIELD MEMO A few weeks ago we sent you some information on the financial strength of North American Company for Life and Health Insurance. Since that time, the financial markets have continued to experience severe stress. We thought it would be useful to provide you with some specific information on our positions in the financial services sector, as well as some perspective on how we are managing through this environment. First, you should know that much of what you are seeing today was not a surprise to us or Guggenheim Partners, our investment manager. In September 2005 Scott Minerd, Chief Strategist for Guggenheim Partners, stated that he believed we were going to see a residential real estate crisis of Biblical Proportions. No one wanted to believe it at the time, but that is clearly what happened. For us, this became a call to action and is the reason, as we mentioned in our last release, that we have less than one-half of one percent of our assets in subprime mortgages. Additionally, Guggenheim moved to the next step of determining who would be most impacted by a housing crisis. The obvious answer was investment banks and commercial banks. For that reason, we significantly reduced our exposure to this sector. Of some of the more prominent names you have been reading and hearing about lately, we have absolutely no loss exposure to AIG, Fannie Mae, Freddie Mac, National City, Wachovia or WaMu in our investment portfolio. For Bear Stearns and Lehman Brothers, North American has realized losses and taken impairment write-downs of less than 0.08% of our statutory admitted assets at September 30, 2008 and we have no remaining investment balances in these entities. As you can see, at this point the losses are modest and very manageable. We think it is also important to point out the differences between the types of risks taken by traditional life insurance companies and other financial institutions. The life insurance business is highly regulated and investment portfolios like ours are quite conservative. In fact, over 58% of our portfolio is in AAA rated securities and over 95% of our portfolio is rated investment grade. INVESTMENTS BY TYPE BONDS BY NAIC QUALITY RATING 93.2% Bonds 3.0% Other Investments 2.1% Stocks 1.3% Policy Loans 0.4% Cash & Short Term Investments 78% NAIC Class 1 17% NAIC Class 2 5% Non-Investment Grade Continued on reverse Z PRT 10-08

2 FIELD MEMO A.M. Best A+ (Superior) 1,2 2nd highest out of 15 categories A.M. Best is a large third-party independent reporting and rating company that rates an insurance company on the basis of the company s financial strength, operating performance, and ability to meet its obligations to contract holders. Standard & Poor s Corporation AA- (Very Strong) 2,3 4th highest out of 22 categories Standard & Poor s Corporation is an independent third-party rating firm that rates on the basis of financial strength. Fitch Ratings AA- (Very Strong) 4th highest out of 24 categories Fitch is a leading global rating agency committed to providing the world's credit markets with independent, timely and prospective credit opinions. 1. A.M. Best rating assigned on January 4, For the latest rating, access 2. Awarded to North American as part of Sammons Financial Group, which consists of Midland National Life Insurance Company and North American Company for Life and Health Insurance. 3. Standard & Poor s Corporation rating assigned December 21, Ratings shown reflect the opinions of the rating agencies and are not implied warranties of the company s ability to meet its financial obligations. Data based on financials as of 6/20/08. We also believe there is a cultural difference at North American. There is a clear recognition that the assets we manage come from our policyholders. They rely on us to provide financial security and protection from the unexpected. As a privately held company, we focus on the long term. Quarterly earnings are not unimportant, but delivering on our promises is our most important mission. In difficult times like this, every company, including us, will take some losses. However, our conservative management and long-term focus will be keys to our continued growth and success. Thank you for your continued support, we appreciate your business Z Annuity Service Center P.O. Box Des Moines, IA PRT 10-08

3 September 16, 2008 North American Annuity Agents CURRENT ECONOMIC ENVIRONMENT UPDATE We have been reading and hearing a great deal from the media about the problems facing companies in the financial services industry today. Government bailouts, attempts to raise additional capital, forced mergers and even bankruptcy have become the solutions for many companies, and surely there will be more in the days ahead. It is only natural that our policyholders, distribution partners and employees may ask how this will impact North American Company for Life and Health Insurance and its affiliated companies. Our conservative investment policy has required that investments in individual companies be kept at low levels for a company our size, which has resulted in a much diversified investment portfolio. With more than $30 billion in invested assets, however, it should not be surprising that we have investments in financial services companies such as banks, investment banks and insurance companies. We also have investments in mortgage-backed securities. However, we can also say that we have limited our investment in subprime mortgage-backed investments over the past few years, which has kept our exposure to these investments very low compared to many companies. In fact, subprime currently represents less than one-half of one percent of our investment portfolio. In addition, problems in the insurance side of the business have not resulted from basic products like the life insurance and annuities that have been the focus of our Company. Rather, they have come from more exotic types of insurance or investments, such as credit default swaps that insure bonds against default. This is not a business we are in. To date, our losses have been small relative to our capital and total assets and they have not had a material effect on the financial position of our companies or our ratings. No one can predict the future, however. The magnitude of any future losses will depend on how our economy and the financial markets respond to the current issues, and how long this investment climate continues. We have already taken steps to react to the current state of affairs, and we can assure you we will take more steps in the future as we continue to monitor markets and individual investments in our portfolio. The issues we have seen have been manageable for our insurance companies and we expect this to be the case in the future Z-C Annuity Service Center P.O. Box Des Moines, IA PRT 08-08

4 NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE COMPANY PROFILE $388 million in capital, surplus and investment reserves protect contractholders and makes North American Company strong. Our capital ratio - the ratio of our total capital and surplus (including investment reserves) to our adjusted liabilities is 9 percent. Investments ($6.5 billion) by type 95% Bonds 3% Other Investments 1% Stocks 1% Policy Loans Bonds ($6.2 billion) by NAIC quality rating 76% Class 1: highest quality 18% Class 2: high quality 4% Class 4 and below: low quality 2% Class 3: medium quality ETHICAL CONDUCT North American Company is a member of the Insurance Marketplace Standards Association (IMSA). IMSA is a voluntary membership organization of life and annuity insurers. Its members pledge honesty, fairness and integrity in all customer contacts. IMSA was created to promote high standards of ethical conduct in an insurance company s advertising, sales and service. North American Company s IMSA membership demonstrates our commitment to these high ethical standards. To become an IMSA member, insurance companies have to undergo IMSA s two-step assessment process: An internal assessment examining daily activities in sales and marketing, agent licensing, underwriting, new business, customer service, complaint-handling and claims, and An external assessment by an independent examiner to ensure that the company meets the criteria set out in the ethical market conduct program. For the millions of Americans who buy insurance, the IMSA designation is an assurance that North American Company holds our agents and employees to IMSA s rigorous high standards. 7974Z REV 07-08

5 NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE ABOUT NORTH AMERICAN COMPANY S PARENT COMPANY North American Company s parent company, Sammons Enterprises, Inc., is one of the world s most respected private holding companies. In addition to owning multiple diverse operating entities, Sammons also actively manages a diversified portfolio of private equity and fund investments. Our people are focused on creating longterm, enduring financial value while living our values-based culture. Core value such as ethics and integrity, open and honest communication, and respect for the individual provide the foundation for our daily behavior and the business results we achieve. The strength of Sammons and the driver behind its solid financial results are the 4,500 people spanning the globe who are part of the Sammons family of companies. Sammons prides itself on employing the highest quality of personnel, placing emphasis on strong work ethics, high moral values and employee benefits. PORTRAIT OF FINANCIAL STABILITY A.M. Best A+ (Superior) 1,2 2nd highest out of 15 categories A.M. Best is a large third-party independent reporting and rating company that rates an insurance company on the basis of the company s financial strength, operating performance, and ability to meet its obligations to contract holders. Standard & Poor s Corporation AA- (Very Strong) 2 4th highest out of 22 categories Standard & Poor s Corporation is an independent third-party rating firm that rates on the basis of financial strength. Fitch Ratings AA- (Very Strong) 4th highest out of 24 categories Fitch is a leading global rating agency committed to providing the world's credit markets with independent, timely and prospective credit opinions. 1 A.M. Best rating assigned on January 4, 2008 For the latest rating, access 2 Awarded to North American as part of Sammons Financial Group, which consists of Midland National Life Insurance Company and North American Company for Life and Health Insurance. Ratings shown reflect the opinions of the rating agencies and are not implied warranties of the company s ability to meet its financial obligations. Ratings are current as of the date of this brochure. 7974Z REV 07-08

6 building on over 120 years of experience A leader in life insurance and annuity products and services.

7 Servicing the life insurance marketplace since 1886, North American Company for Life and Health Insurance ( North American Company ) operates from a base of financial strength, which instills confidence in servicing agents and their clients. North American Company s product line is marketed in 49 states and the District of Columbia. North American Company is ultimately owned by Sammons Enterprises, Inc., one of the country s largest privately held companies. Insurance operations are the core and strength of Sammons Enterprises. The Sammons Financial Group Linda Cheeks comprised of Office Services North American Coordinator Company for Life and Health Insurance and Midland National Life Insurance Company services 1.5 million policies with $224 billion of life insurance in force. A significant driving factor behind Sammons Enterprises success is the dedicated employee-shareholder force, 1 who are customer-focused and committed to offering consistent and reliable service. North American Company maintains high standards as a product-driven company that offers value-based solutions. To meet these standards, North American focuses on generating consistent, sustainable growth in sales and profit by exceeding distribution partner expectations. North American offers sophisticated universal life plans, competitive term life plans and a family of fixed and indexed annuities. With North American s product portfolio, consumers can purchase a plan best suited for their individual needs. Our ability to meet the needs of a variety of consumers is reflected in our sales results. North American Company: Sold over 10,000 new life policies with an average size of $409,000 in Placed over $4 billion of life insurance in force during 2007, for a total of over $107 billion of life insurance in force. Prudent Investments North American Company s investment objective is to achieve both competitive earned rates and attractive total investment returns to support its strong product position. North American Company s portfolio strategies include the integration of all asset classes, specialized portfolio techniques, portfolio segmentation by product, and diligent management of durations on assets and liabilities. This careful management has yielded a strong, stable position: Bonds, cash, short-term investments, and policy loans represent 94% of total assets. Steve E. Palmitier President & COO Of the bond portfolio, 94% is investment grade. Judy Body Associate Meetings and Event Planner A word from our president: Dear Valued Client, Choosing the right company to help secure your financial future was an important decision. Thank you for deciding on North American Company. We are committed to protecting your plans each step of the way. We have been helping people secure a brighter financial future for over 120 years and our commitment continues with you. You have our commitment to meet our obligations to protect your financial plans. This is a commitment we do not take lightly and our hard work is represented in the strong financial ratings we have received. These ratings reflect our promise to be here for you when you need us most. The ongoing success of North American Company is our life s work. We are determined to continue to build a great company to meet the needs of today and for the next 120 years and beyond. Sincerely, Recognized Quality The National Association of Insurance Commissioners (NAIC) has established a bond ranking system, which places bonds into six categories, based on their Standard & Poor s investment ratings. The quality of North American Company s bond portfolio, based on the NAIC s standards, is shown below. Quality Distribution of Bond Portfolio As of December 31, 2007 Rating Category Percentage AAA, AA, A % BBB % Investment Grade 94.0% 1 Employees do not include independent insurance producers or registered representatives. PR-578 BB 3 2.1% B 4 2.6% CCC 5 1.3% In or Near Default 6 0.0% Below Investment Grade 6.0%

8 Sound Measures In the life insurance industry, the financial soundness of a company is judged by a number of criteria, ultimately reflected in its ratings. The following information reflects North American Company s strengths: A+ (Superior) Rating from A.M. Best A.M. Best is a large third party independent reporting and rating company that rates an insurance company on the basis of the company s financial strength, operating performance and ability to meet its ongoing obligations to policyholders. A+ is the second highest rating out of 15 rating categories and was assigned to North American, as part of the Sammons Financial Group, on January 4, For the latest rating, access AA- (Very Strong) Rating from Standard & Poor s Standard & Poor s has assigned its AA- (Very Strong) rating for insurer financial strength on December 5, 2006 to North American Company, as part of Sammons Financial Group. The AA- (Very Strong) rating is the fourth highest out of twenty-two available ratings and reflects Sammons Financial Group s (which is comprised of North American Company for Life and Health Insurance and Midland National Life Insurance Company) financial strength. PR-578 R8 4/08 Executive Office 525 W Van Buren Chicago IL nacolah.com Todd Jungenberg Senior Compliance Analyst Member of the Insurance Marketplace Standards Association (IMSA) IMSA is an independent, voluntary organization that has been created by the life insurance industry as another means to ensure that companies who qualify for membership meet and maintain high standards of ethical conduct in their dealings with consumers. IMSA membership complements our ongoing compliance activities required under state law. Overall Financial Strength Capital surplus and AVR of nearly $438 million, with a capital, surplus and AVR to liabilities ratio of 7%. North American Company has over $6.6 billion in assets. Richard Pinnell Staffing Specialist, Information Technology Patricia McNamara Administrative Assistant, Mortality Management Department Balance Sheet As of December 31, 2007 Assets (in thousands) Bonds $6,186,344 Preferred Stock 57,494 Common Stock 5,225 Policy Loans 78,398 Cash & Short-term Investments 6,597 Other Invested Assets 158,372 Accrued Investment Income 59,827 Other Assets 71,467 Life & Annuity Premium Due 13,589 Total $6,637,313 Liabilities, Capital, and Surplus (in thousands) Net Policy Reserves $5,155,181 Policy Claim Reserves 32,187 Commissions, Taxes & Expenses 47,756 Asset Valuation Reserve (AVR) 50,567 Retained Assets Liability 64,801 Interest Maintenance Reserve 18,264 Securities Lending 811,778 Other Liabilities 69,127 Total Liabilities 6,249,661 Common Stock 2,500 Paid-In & Contributed Surplus 256,675 Unassigned Surplus 128,477 Total Capital & Surplus 387,652 Total $6,637,313