Certain bodyfat storage and distribution patterns are red flags for a number of health risks. Individuals who have the tendency to store fat around the midsection are often found to have other health risk factors going on such as high triglycerides, high blood pressure and high blood sugar levels. The portion of the abdominal fat that resides directly around the organs--known as visceral fat-- as opposed to the subcutaneous portion, which is the fat just beneath the skin, is the biggest culprit for health risks. The good news is that exercise is found to promote abdominal fat loss preferentially over fat stored in other areas of the body. And abdominal fat is the most dangerous kind.
Muscle fibers also change in response to exercise, becoming more responsive to insulin. These exercise-induced muscle fibers also have higher capillary density and greater blood supply. These changes result in lower blood sugar levels and a lowered risk of diabetes.
When you are actively exercising, you will maintain increased muscle mass and along with it the associated higher metabolic demand for blood sugar at all times, including during rest. This makes diabetes less likely to develop.
Many individuals who have to go on medication due to diabetes find that, when a proper exercise program is maintained, they can either reduce or eliminate the medication (with a doctor's supervision).