S&P Raises Fireman’s Fund Rating to A+

October 4, 2007

Standard & Poor’s Ratings Services said it raised its counterparty credit and financial strength ratings on Novato, Calif.-based Fireman’s Fund Insurance Co. and affiliates to “A+” from “A,” noting the outlook is positive.

“The upgrade reflects the insurer’s significant progress in strengthening its stand-alone competitive position, operating performance, and balance sheet strength, while improving overall risk management in close conjunction with its ultimate parent, Allianz SE,” said Standard & Poor’s Credit Analyst Michael Gross. “The positive outlook reflects the potential for the insurer to achieve further integration and success with Allianz group and its North American affiliates with regard to enterprise risk management, as well as shared services and expense synergies.”

S&P said it expects Fireman’s Fund to generate low single-digit premium growth in 2007 and 2008, as the insurer aims to preserve its profitable business rather than pursue market-share growth in a soft pricing environment. The company is expected to generate approximately $650 million in net statutory earnings in 2007 and produce a strong combined ratio in the low 90 percent range assuming average catastrophe losses, S&P indicated. Although some earnings pressure might be felt in 2008 due to cyclical considerations, Standard & Poor’s expects the insurer to sustain strong operating fundamentals.

The positive outlook could result in a one-notch upgrade in about 12 months if the insurer continues to demonstrate further integration and success with the Allianz group and its North American affiliates in terms of shared services and enterprise risk management, S&P said. The potential upgrade would not alter the view that the insurer is strategically important to, but not core to, Allianz, but would reflect our enhanced view of its integration with Allianz.

For more information, visit www.standardandpoors.com.

Source: S&P

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