S&P Issues Report on European Insurers U.S. Operations

September 8, 2005

Standard & Poor’s Ratings Services has issued a new report on how European insurers are doing in the U.S. market. The article entitled “Some European Insurers Maintain U.S. Property/Casualty Operations Despite Mixed Results,” notes that “recent historical challenges for the European writers have been numerous, most notably, questionable underwriting discipline, above-average exposure to equity investments, the Sept. 11, 2001, terrorist attacks, and adverse asbestos and mold claims development.”

S&P also said that, “although the operating fundamentals of the U.S. property/casualty market have improved dramatically in 2003-2005, European insurers have had a checkered track record in the U.S. property/casualty market over the past five years.”

“Although U.S. property/casualty writers have not been immune to these same conditions and events, the impact on Europeans writers has been material and requires a constant reassessment of their commitment to the U.S. marketplace,” noted S&P credit analyst Michael Gross.

The report also acknowledges that some European insurers have significantly reduced or abandoned the U.S. P/C market over the past decade, while others have stayed. S&P singled out Germany’s Allianz and Swiss-based Zurich Financial Services and their U.S. affiliates as being of notable interest to investors. Allianz operates through Allianz Global Risks U.S. Insurance Co. (AA-/Stable/–) and Fireman’s Fund Insurance Co. (A/Stable/-); Zurich operates through Zurich American Insurance Co. (A+/Negative/–) and Farmers Insurance Exchange (A/Negative/–).

S&P said: “Questions are frequent because these units are meaningful operations of their respective parent groups, have established varying financial track records in the U.S., often have unique operating structures, and face different competitive forces. The article offers a closer comparative look at these companies, the ratings, views on strategic importance, and expectations for prospective performance in the U.S.”

The report is available to subscribers of RatingsDirect, Standard & Poor’s Web-based credit research and analysis system, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor’s public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. All Standard & Poor’s research information is accessible for 24 hours after publication on the public Web site.

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