S&P Ups Outlook, Affirms Allianz Australia Ratings

June 3, 2004

Standard & Poor’s Ratings Services announced that it has revised the rating outlook on Allianz Australia Insurance Ltd. (Allianz Australia) and its associated company, Allianz New Zealand Ltd., to positive from stable. S&P also affirmed the long-term ‘A-‘ insurer financial strength and counterparty credit ratings on the two companies.

“The outlook change reflects Allianz Australia’s continued earnings momentum exhibited by the company’s significant turnaround in its operating performance for fiscal 2003,” stated S&P credit analyst Michael Vine. “The prospects of Allianz Australia achieving consistent and sustainable earnings performance in the short term appear encouraging, assisted by sound underwriting practices and a stronger balance sheet to underpin its stand-alone financial strength.”

Vine also noted: “The company’s supportive capitalization continues to be assisted under its strategically important status in the Allianz AG. S&P said, however, that it has not “moved the rating on Allianz Australia to a higher level, because the earnings turnaround was achieved in a relatively short period after years of under performance. Continued evidence of sustainable earnings and capital strength is required to support a higher rating.”

“The ratings on Allianz Australia reflect its sound and improved business profile in the Australian general insurance market, strengthened operating results, prudent reserving practice, and current capital strength, underpinned by its membership status of the Allianz AG (AA-/Negative/A-1+),” the bulletin continued. “Moderating factors are its relative concentration in long-tail and commercial business lines compared with peers’, and high reliance on intermediaries as its channel of distribution.”

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