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SUPPLEMENT DATED AUGUST 19, 1999
TO PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1999
PINNACLE FLEXIBLE PREMIUM VARIABLE ANNUITY
INTEGRITY LIFE INSURANCE COMPANY
THE FOLLOWING SUPPLEMENTS INFORMATION IN THE PROSPECTUS UNDER "INTEGRITY LIFE
INSURANCE COMPANY" IN PART I, SECTION 2, AND IN THE STATEMENT OF ADDITIONAL
INFORMATION IN PART 1, "INTEGRITY AND CUSTODIAN," AND PART 9, "FINANCIAL
STATEMENTS."
ARM Financial Group, Inc. is restructuring its institutional business in order
to focus on its retail annuity business and technology services and to better
position the company for sale. As part of the restructuring, ARM incurred a one
time net charge of $90 million in its second quarter of 1999. The charge
reflects the recapture by a business partner of approximately $3.5 billion of
institutional assets and liabilities that Integrity Life Insurance Company had
been reinsuring as part of a joint product development, marketing, and
reinsurance arrangement. As a result of that transaction, ARM reported a second
quarter net loss of $173.9 million.
Following these events, four independent rating agencies lowered their ratings
of Integrity. Integrity is now rated "B-" (Fair) by A.M. Best Company, and has
received claims paying ability ratings of "B" (Weak) from Standard & Poor's
Corporation, "BBB+" (Adequate) from Duff & Phelps Credit Rating Company, and
"Ba3" (Questionable) from Moody's Investors Service, Inc. A.M. Best's ratings
range from "A++" (Superior) to "F" (Liquidation). Standard & Poor's claims
paying ability ratings range from "AAA" (Extremely Strong) to "D" (Liquidation).
Duff & Phelps' claims paying ability ratings range from "AAA" (Highest) to "DD"
(Default). Moody's claims paying ability ratings range from "Aaa" (Exceptional)
to "C" (Lowest).
The basis for an opinion on a particular rating includes such factors as capital
resources, financial strength, demonstrated management expertise, and stability
of cash flow, as well as the quality of investment operations, administration,
and marketing. These ratings are neither a rating of securities nor a
recommendation to buy, hold, or sell any security. Moreover, the ratings have no
bearing on or relationship to the performance of Separate Account II or its
underlying Investment Options.
The assets of Separate Account II are not subject to the claims of Integrity
Life's general account creditors. Rather, Separate Account II's assets are only
available to meet the claims of Pinnacle variable annuity contractowners.
