December 2, 2008

Like many other companies in the insurance and banking industries, Standard Life Insurance Company of Indiana experienced investment losses during the 3^rd Quarter of 2008. As a result of these losses, and because of the current worldwide economic circumstances, A.M. Best has downgraded Standard Life from B++ to B with a negative outlook. Best stated in part:

"Offsetting these negative factors are Standard Life's overall profitable operating performance, enhanced by active spread management and effective asset/liability management and hedging techniques in support of its interest-sensitive liabilities. Furthermore, A.M. Best notes that CAC (Capital Assurance Corporation) continues to explore several capital raising initiatives which could materially increase Standard Life's statutory capital and surplus. If a sufficient amount of capital is raised so as to materially improve the company's risk-adjusted capital position, A.M. Best would consider upgrading the ratings."

We remain committed to building Standard Life of Indiana into the kind of company that is known for doing the right things for its customers. Our top priority is the safety and security of our policyholders' money. To that end we are currently:

• Seeking to raise capital to build and restore our capital and surplus to previous levels.  Today's challenging circumstances are adding to the difficulty of, and extending the amount of time it takes to complete, capital transactions, but we continue to work aggressively toward our objective.
• Continuing to design and market fixed annuity products that deliver high value to customers and competitive compensation for agents without requiring undue investment risk
• Striving to offer the best customer and agent service in our business, including timely bulletins about the financial condition of the company

Since the news of this downgrade last week, I've been heartened by the calls and emails from agents and marketing organizations offering support. Clearly, our distribution values our customer-oriented business model. Rest assured we will continue our vigorous efforts to move Standard Life of Indiana forward now and in the future.

If you have any questions, please contact us at 800-767-7749.

Thank you for your continued support,

J. Daniel Gunther

President

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