Best Affirms Allianz (Switzerland) ‘A’ Ratings

February 14, 2005

A.M. Best Co. announced that it has affirmed the financial strength ratings of “A” (Excellent) of the Swiss affiliates of Germany’s Allianz – Allianz Suisse Versicherungs (ASV) and Allianz Suisse Lebensversicherungs (ASL) – with a stable outlook.

“The ratings reflect the companies’ strategic importance to their ultimate parent, Allianz AG, their excellent business position in the Swiss market and stable capitalisation and operating performance,” said Best.

The rating agency said it “believes that life business (47 percent of consolidated group premiums) will grow by a strong 5 percent due to the stable group business demand and increasing unit linked sales. Non-life direct premiums (49 percent of consolidated group premiums) are likely to continue to grow moderately at approximately 3 percent (as shown in 2004) on the basis of rate increases in motor and accident and healthcare business and the introduction in late 2004 of new products for liability and construction business. Inward reinsurance premiums are likely to decline as a result of the decrease in reinsurance rates and ASV’s opportunistic strategy in the reinsurance market.”

Best also said it “expects group consolidated profits to continue improving following their 50 percent increase in 2004. Non-life combined ratio is likely to stabilise at around 100 percent (after the strong four percentage points improvement shown in 2004 to 101 percent) due to the rate increases. ASL’s profits will deteriorate slightly after the 25 basis points increase in the group life’s technical interest. This follows the more than doubling of life net profits reported in 2004.

“Risk-adjusted capitalisation will remain strong as the moderate consolidated premium growth is compensated by increases in retained earnings and increases in soft capital elements. Consolidated capitalisation is unlikely to return to previous superior levels as the group depends heavily on group life business. A.M. Best believes that ASL’s extraordinary capital requirements will be covered by ASV, should the need arise.”

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