A.M. Best Affirms Rating of Allianz Cornhill.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 10, 2003 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A+ (Superior) of Allianz Cornhill Insurance plc (London). The rating reflects the company's status as a core subsidiary of its ultimate parent, Allianz Aktiengesellschaft, its excellent stand-alone risk-adjusted capitalisation, business profile and improving operating performance. The main offsetting factor is Cornhill's concentration of risk in the UK market. The outlook is negative. Core status--A.M. Best regards Allianz Cornhill as a core company to Allianz AG. A.M. Best continues to closely monitor this core status. Excellent risk-adjusted capitalisation--Allianz Cornhill's stand-alone capitalisation has been restored in the last two years through GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 155 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 225 million) additional capital received from its parent, GBP 38.2 million (USD 61.3 million) retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. in 2002 and a 90% cession The act of relinquishing one's right. A surrender, relinquishment, or assignment of territory by one state or government to another. The territory of a foreign government gained by the transfer of sovereignty. CESSION, contracts. of capital intensive related global risk business to the Allianz Group. In addition, the company is managing its exposure to volatility in the equity markets through the purchase of tradable options in 2003. Improving operating performance--A.M. Best expects Allianz Cornhill to report earnings above 15% ROE in 2003 due to the strong improvement in underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. profitability and the partial recovery in equity markets during the second and third quarter. A.M. Best believes a combined ratio of approximately 96% is likely during 2003 as Allianz Cornhill continues to manage a potential softening of private motor rates whilst achieving additional pricing increases in other lines. Excellent business position--Allianz Cornhill is the seventh largest general insurer in the UK with a market share above 4%. The company has established itself as a leading insurer of large and mid-market commercial risks and a class-leader in selected personal lines, including animal health and musical instrument insurance. Although the risk profile is well spread across many classes, A.M. Best believes Allianz Cornhill's business position may come under pressure due to the likelihood of further consolidation in the UK market and the company's lack of international diversification International diversification The attempt to reduce risk by investing in more than one nation. By diversifying across nations whose economic cycles are not perfectly correlated, investors can typically reduce the variability of their returns. . 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. |
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