S&P Sees No ‘Immediate Impact’ on Allianz Ratings from AGF Buyout

January 18, 2007

Standard & Poor’s Ratings Services indicated that Germany’s Allianz (AZSE) plans to buy out the minority shareholders in Assurances Generales de France (AGF – rated ‘A’/Positive/ ‘A-1’) and in Allianz Leben (rated ‘AA-‘/Positive/–) are “not expected to have an immediate impact on the rating and outlook on AZSE and its related core entities.” (See related article for buy-out details)

“The move is in line with management’s strategy to reduce complexity, creates the basis for further integration, and eliminates significant dividend leakage,” S&P noted.

“The transactions are to be financed via a capital increase and internal funding, and are unlikely to alter significantly AZSE’s financial leverage, the bulletin continued. “However, the move is likely to have a slightly negative impact on capitalization and on financial flexibility (defined as the ability to source capital relative to capital requirements).” S&P said it “does not expect any material erosion of AZSE’s financial strength due to the conservative funding structure and given continued very strong operating performance.”

The rating agency intends to “closely monitor implementation, thereby focusing its attention on whether the financing will be in line with management’s commitment to maintain the financial profile of AZSE and its subsidiaries in line with respective ratings. Any unexpected material deviation from this commitment could result in the outlook on AZSE reverting to stable.

“Conversely, successful delivery on the transaction as well as on AZSE’s ongoing restructuring programs, combined with continued very strong operating performance and a conservative financial profile could lead to a ratings upgrade in the next twelve months.”

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