[February 11, 2003]

The UC Treasurer’s Office has negotiated three new contracts for the Insurance Company Contract (ICC) Fund for 2003. Three contracts were chosen to obtain the best rates for the Fund, based on the contract maturity dates.

The first contract, with Transamerica Occidental Life Insurance Company, has a 4.12 percent guaranteed interest rate and has staggered maturities of January 2004, January 2005, and December 2008. The second contract, with The Travelers Insurance Company, has a guaranteed rate of 4.17 percent and has staggered maturities of January 2004, January 2005, and December 2009. The third contract is with Principal Life Insurance Company and provides a 4.20 percent guaranteed rate with staggered maturities of December 2003, December 2004, and December 2009.

Contributions invested in the ICC Fund during 2003 will be pooled with existing money in the Fund to produce a blended rate of return that reflects the average yield of all the contracts in force. Assuming that 2003 deposits follow anticipated cash flow trends, the Fund should produce a net yield of 5.95 percent in 2003.

Based on these companies’ financial condition and operating performance, A.M. Best and Company rates Transamerica Occidental and Principal Life as A+; the rating for The Travelers is A++.

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