S&P Raises Allianz Ratings to ‘AA’

July 13, 2007

Standard & Poor’s Ratings Services has raised its long-term counterparty credit and insurer financial strength ratings on Germany’s Allianz SE (AZSE) and various core operating entities to ‘AA’ from ‘AA-‘.

S&P added that as a consequence of the upgrade on AZSE it has also raised to ‘AA-‘ from ‘A+’ the ratings on various AZSE’s strategically important insurance subsidiaries. The outlook on all entities is stable. S&P also affirmed its ‘A-1+’ short-term ratings on AZSE and various core operating subsidiaries.

“The upgrade reflects major and sustained improvements in Allianz’s operating performance and a positive view of management combined with the expectation that Allianz will continue to efficiently execute its strategy,” stated S&P credit analyst Karin Clemens.

“The ratings are further supported by Allianz’s very strong competitive position and financial flexibility,” the bulletin continued. However, S&P noted that “partially offsetting factors are Allianz’s capitalization, which is lower than that commensurate with the current rating level and the relatively weaker creditworthiness of Dresdner Bank AG (A+/Positive/A-1).”

Clemens indicated that the “stable outlook reflects the expectation that operating performance will remain very strong based on the successful execution of strategy. This, in our view, should translate into an average combined ratio of at least 97 percent for 2007-2009, a life and health new business margin in excess of 3 percent, and into continued growth in operating profits for the group’s banking and asset-management activities.”

S&P expects AZSE’s capitalization to be at least maintained at current levels. In addition, management is expected to limit acquisitions and/or shareholder remuneration “to an amount that is compatible with the current ratings and stable outlook.”

S&P concluded: “A negative rating action could follow if Allianz increased its capital leverage significantly further, or if the group failed to deliver on Standard & Poor’s earnings growth expectations as outlined above. We regard a revision of the outlook to positive as a remote possibility over the rating horizon.”

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