A.M. Best Affirms Financial Strength Rating of Assicurazioni Generali; Assigns Debt Ratings.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--May 9, 2002

A.M. Best Co. has affirmed the A+ (Superior) financial strength rating of Assicurazioni Generali S.p.A. (Generali).

At the same time, A.M. Best has assigned an "aa-" rating to Generali's senior debt and an "a+" to the subordinated debt of Generali. Similar ratings have been assigned to debt guaranteed by Generali and issued by Generali Finance B.V, a special purpose vehicle.

The rating reflects Generali's excellent consolidated capital base, leading market position within both its home market and continental Europe, which has been strengthened by acquisitions and improved operating performance. Despite weakening economic conditions in most major markets, the group continued to produce strong bottom line results with a 14.1 % return on equity in 2001. Major acquisitions have included the purchase of the INA (Istituto Nazionale delle Assicurazioni) insurance group in Italy--reinforcing its position in the home market--and of the Aachener and Muenchener Beteiligungs A.G. (AMB) in Germany.

Offsetting factors include challenges associated with the integration of INA's operations and the simultaneous restructuring of some European operations--Austria and Spain in particular. The outlook is stable.

Excellent capitalisation--Based on A.M. Best's risk-based capital model, Generali has an excellent consolidated capital base which has significantly improved since the acquisition of INA. Overall financial leverage continues to be within A.M. Best's guidelines for a superior rating. After a slight deterioration in 2001, A.M. Best expects interest coverage to strengthen in 2002 and beyond. A.M. Best also recognises the improvements in the risk management and capital allocation processes employed across all entities within the group.

Excellent business position--Generali is the leading insurer in Italy, in the life and non-life sector, with 23.2 % and 16.7 % market shares, respectively. In Europe, Generali enjoys a very high profile, particularly in Germany, France, Austria and Spain, and it ranks as the third-largest European group with gross premiums of Euro 45.6 billion in 2001. The acquisition of the INA group further reinforced its position in Italy, while its overall European position was strengthened by other significant acquisitions, particularly Aachener and Muenchener Beteiligungs A.G. (AMB). A.M. Best believes that Generali is optimally positioned to reap the benefits of the increased demand for investment linked life insurance products in those European markets where proposed state budgetary pension cuts and an aging population are incentives for consumers to seek tax advantaged savings alternatives.

Improved underwriting performance--The extensive restructuring measures undertaken--both in Italy and abroad--led to improved consolidated underwriting results at year-end 2001. The non-life combined ratio fell by two points to 108.4 %. A.M. Best expects Generali's continued focus on cost savings and stringent underwriting controls to lead to a further reduction in this combined ratio in 2002. Underwriting results for life business also improved in 2001, providing for a significant increase in its reported margin from 1.7 % to 3%. A.M. Best also expects further improvement for 2002.

Integration of acquisitions and restructuring--The group faces the challenge of finalising the integration of some of its operations, while expanding into new markets such as Eastern Europe and China. Under Generali's restructuring process, it seeks to enhance group control and coordination, attain greater efficiencies in the allocation of capital and achieve cost revenue synergies. The group will continue to seek acquisitions that augment and strengthen its market position.

Expectations:

- "aa-" rating on EUR 1,500 million 4.75% senior notes, due 2014

- "a+" rating on EUR 500 million 5.065% fixed/floating rate subordinated notes,
due 2019

The following debt ratings have been assigned:

Assicurazioni Generali, S.p.A.--

- "aa-" rating on EUR 1,500 million 4.75% senior notes, due 2014

- "a+" rating on EUR 500 million 5.065% fixed/floating rate subordinated notes,
due 2019

Generali Finance B.V. (guaranteed by Assicurazioni Generali S.p.A.)--

- "aa-" rating on EUR 1,500 million 4.75% senior notes, due 2014

- "a+" rating on EUR 500 million 5.065% fixed/floating rate subordinated notes,
due 2019

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.