A.M. Best Affirms Financial Strength, Debt Ratings for Generali-Assicurazioni Generali S.p.A.

March 3, 2004

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Generali-Assicurazioni Generali S.p.A. (Generali) (Italy). At the same time, A.M. Best has affirmed the ratings of debt instruments issued or guaranteed by Generali. (See list below.) The outlook on all ratings remains negative.

The ratings reflect Generali’s superior business profile, in addition to its excellent and improving capitalization and operating performance. Offsetting factors include the continued challenges faced by Generali arising from the consolidation of its recent acquisitions and the restructuring of subsidiaries, specifically in Continental Europe. Superior business profile–Generali is the largest composite insurer in Italy and maintains a leading profile in Germany, France, Spain and Austria.

The selective expansion into other territories such as the Central Eastern European and the Chinese life markets is expected to enhance the diversity of the group. Non-life premiums showed a moderate growth of 2.2 percent in 2003, reaching EUR 19.8 million (USD 25 million) as the company withdrew from industrial business and reduced its motor portfolio while increasing rates. Life business (accounting for 60 percent of consolidated premium income) grew by an excellent 7.9 percent, reaching EUR 29.8 million (USD 37.6 million), mainly driven by new business as the agreement with Banca Intesa began delivering results. A.M. Best anticipates similar growth rates for 2004, primarily from new traditional life products.

The challenges Generali faces as it tries to consolidate its recent acquisitions in France (including Le Continent and a portfolio from Zurich Financial Services) may prove a strategic distraction; however, A.M. Best believes that the company has the necessary skills to execute a successful integration.

Excellent and improving capitalization — On a risk-adjusted basis, consolidated capitalization has improved during 2003, with further enhancement expected in 2004. The recovery in investment markets during 2003 led to increased asset valuations and higher adjusted shareholders’ funds, while the company’s risk profile remained largely unchanged. Generali’s risk profile will improve due to the reduction in industrial business outside of Italy and the re-pricing and enhanced terms for life business (introduction of maturity guarantees for new life business in Italy). However, the majority of the company’s in-force life business continues to include policies with high return guarantees resulting in strong dependence on investment returns.

Excellent and improving operating performance — A.M. Best expects year-end 2003 net profits in excess of EUR 800 million (USD 1,010 million), compared to a loss of EUR 754.5 million (USD 719.7 million) in 2002. Restructuring measures including enhanced risk selection for non-life business (both in Italy and abroad) are likely to reduce the combined ratio by three percentage points to below 105 percent in 2003. Life technical profitability will remain stable in 2003, although profit margins continue to be under pressure from low interest rates and relatively high average guarantees. The continued restructuring of operations (including staff reductions in Europe) and the centralization of risk management activities will reduce operating expenses.

The following debt ratings have been affirmed:

Generali-Assicurazioni Generali, S.p.A.–

— “aa-” rating on EUR 750 million 4.5% senior debentures, due 2009

— “aa-” rating on EUR 1,750 million 6.15% senior Eurobonds, due 2010

— “a+” rating on EUR 750 million 6.9% fixed/floating rate subordinated callable debentures, due 2022

Generali Finance B.V. (guaranteed by Generali-Assicurazioni Generali S.p.A.)–

— “aa-” rating on EUR 1,500 million 4.75% senior unsecured debentures, due 2014

— “a+” rating on EUR 500 million 5.065% fixed/floating rate subordinated debentures, due 2019

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