S&P Affirms Allianz Suisse ‘A+’ Ratings; Outlook Revised to Positive

April 4, 2007

Standard & Poor’s Rating Services has revised its outlook to positive from stable on Swiss-based life insurer Allianz Suisse Lebenversicherungs – Gesellschaft (ASL) and non-life insurer Allianz Suisse Versicherungs – Gesellschaft (ASV) collectively referred to as AZ Suisse. The two companies are majority owned by Germany’s Allianz SE, rated “AA-” with a positive outlook. S&P also affirmed its “A+” counterparty credit and insurer financial strength ratings on ASL and ASV.

“The outlook revision on ASL and ASV reflects sustained improvements in AZ Suisse’s stand-alone financial strength combined with its continued strategic importance to AZSE,” indicated S&P credit analyst Hiltrud Besgen.

As “Stand-alone rating factors,” S&P cited the two Companies “strong operating performance, a sound competitive position, and strong capitalization.” However, the rating agency indicated that these strengths are “partially offset by AZ Suisse’s concentration on the highly saturated Swiss insurance market and the moderate contribution of life new business to the value-in-force.”

S&P said the “positive outlooks on ASL and ASV reflect that on their ultimate parent, AZSE. A change in the ratings or outlook on the parent will be reflected in the ratings on ASL and ASV, based on the expectation that both companies will remain strategically important to AZSE. A further upward change in the underlying stand-alone financial strength rating is regarded as unlikely at this stage given the currently limited potential for further material performance improvements in the difficult Swiss life insurance market.

“Downward pressure could arise if Allianz Suisse failed to sustain strong operating performance in a less favorable interest and/or operating environment. Its strategic importance is based on the expectation that AZ Suisse will maintain a strong competitive position in non-life insurance as demonstrated by continued profitable growth higher than the market average and an average combined ratio of about 97 percent (on an IFRS basis) throughout the cycle.

“The group is expected to further build competitive strength in life insurance, with growth rates likely to match market growth from 2008 onward and with new business margins remaining at least stable. Moreover the contribution of the life insurance new business value to the value-in-force should continue to increase. Performance should exceed cost of capital and bottom-line results should meet at least a 12 percent ROE. Capitalization should remain strong.”

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