S&P Lowers Ratings of Austrian Insurer UV to ‘A-‘; Outlook Stable

June 2, 2005

Standard & Poor’s Ratings Services announced that it has lowered to “A-” from “A” its counterparty credit and insurer financial strength ratings on UNIQA Versicherungen AG (UV) as well as the rating on UV’s 150 million euro ($184 million) issue of senior unsecured debt. The outlook is stable.

“The downgrades were driven solely by the application of new Standard & Poor’s criteria whereby operating companies that display dominant holding company characteristics may be rated at a lower level than the overall group financial strength would indicate and do not reflect any change or deterioration in the financial risk profile of UV,” stated S&P credit analyst Wolfgang Rief.

The applicable criteria are contained in Section 5 of “Insurance Criteria: Flexible Gapping of Ratings Reflects Regional Variations In Structural Subordination As Well As Differing Debt-Servicing Capacities”, published May 25, 2005, on RatingsDirect, Standard & Poor’s Web-based credit analysis system.

“After a full review of rated companies displaying both operating and holding company characteristics, the decision was taken to introduce a one-notch ratings differential between UV and the group’s overall financial strength, which Standard & Poor’s views as unchanged against the previous ‘A’ level,” Rief continued.

S&P said: “The revised ratings on UV now fully reflect the company’s predominant role as holding company of the Austria-based UNIQA insurance group (UNIQA) as well as its function as the group’s internal reinsurer. Meanwhile, Standard & Poor’s recognizes the tangible progress made across the UNIQA group regarding operating performance following strong improvements in the underwriting results of the Austrian property/casualty business and a successful decrease in overall expense levels, further supported by recovered capital markets, which are reflected in the outlook revision.”

Rief indicated that “the stable outlook reflects Standard & Poor’s expectation that UV will continue to benefit from the strong operating performance at a group level.” S&P also said it expects UV’s liquidity “to be strengthened by strong dividends and profit transfers from its subsidiaries. Specifically, Standard & Poor’s expects UNIQA to achieve combined ratios lower than 100 percent in 2005 and 2006 and a pretax profit of at least 10 percent over the same period. Financial leverage as well as interest and fixed charge coverage are expected to remain fully consistent with the current ratings.”

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