S&P Affirms Allianz ART Ratings, CreditWatch Removed

June 14, 2004

Standard & Poor’s Ratings Services announced that it has affirmed its “AA-” long-term counterparty credit, insurer financial strength, and insurer financial enhancement ratings on Swiss-based Allianz Risk Transfer (ART).

S&P also affirmed its “A-1+” short-term counterparty credit rating on ART. In addition, the insurer financial strength ratings on ART’s two guaranteed subsidiaries, Allianz Risk Transfer (Bermuda) Ltd. and Allianz Risk Transfer N.V., were affirmed at “AA-.” All of the ratings have also been removed from CreditWatch, where they had been placed on May 10, 2004, and assigned a “negative” outlook.

“The ratings reflect ART’s strong operating performance, extremely strong capitalization, very strong liquidity, and strong management team,” stated S&P credit analyst Paul Oates. “The ratings are also underpinned by ART’s increasing strategic role within the Allianz group, evidenced by a growing number of core-like characteristics and the provision of a net-worth maintenance agreement to ART from Allianz AG (AA-/Negative/A-1+),” said the bulletin.

The rating agency noted that “ART’s strong competitive position is enhanced by the ratings on the company being in the ‘AA’ range. Ratings in a lower range would limit the company’s ability to compete for credit enhancement business.” It also explained that the CreditWatch had been placed on the ratings due to S&P’s concern that the parental net-worth maintenance agreement would not meet its requirements.

“Standard & Poor’s is now satisfied that the enhanced agreement and ART’s stand-alone characteristics, taken together, merit an affirmation of the ratings,” Oates continued.

“The negative outlook reflects the negative outlook on the Allianz group as a whole,” said S&P.

It also noted of the following factors:
— ART’s business franchise is expected to develop gradually as markets create further opportunities, with ART continuing to focus on a diversified business mix.
— Traditional business volume will decline or remain flat until 2010 and is expected to continue to be protected against volatility by a rolling stop-loss treaty with Allianz AG (expires 2006).
— Capitalization is expected to remain extremely strong.
— Based on the ratios determined by Standard & Poor’s, ROR and ROE are expected to exceed 5 percent and 9 percent, respectively, over the medium term.
— Standard & Poor’s expects Allianz AG to support ART if required.

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