A.M. Best Affirms Rating of Allianz Group on Strength of Capital and Diversified Earnings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 30, 2000 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 A++ (Superior) financial strength rating of the Allianz Group, Munich, Germany. The rating reflects the group's leading global market position, exceptional balance sheet strength, sustained profitable growth and the demonstrated success in execution of its strategic plan. Allianz is one of the largest insurers in the world, with a dominant position in Germany, ranked among the top five in most European markets and with gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. approximating US $50 billion. The group is also a recognized leader in industrial risk business, providing broad product capabilities, large-lines capacity and a corporate network located in 70 countries that can service large, multinational risks. Allianz has recently made several major acquisitions. These include the purchase of 100% of Life USA, reinforcing the group's presence in the life insurance market; First Life Insurance, the fourth ranked life insurer in Korea; Pimco L.P., the leading US fixed income fund manager. In addition, the acquisition of the equity fund manager Nicholas Applegate, enhancing activities in third party asset management, and Zwoolsche Allgemeene, a Dutch life and non-life insurer, are in process of being finalized See finalization. and will strengthen the group's position in these important markets. Returns on equity before tax have averaged approximately 12% over the last two years. Allianz's balanced 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. risk profile, given the global nature and multiple product capabilities of its business, minimizes earnings volatility. One-third of Allianz's book is comprised of life/health business, while its property/casualty book is largely represented by short-to-moderate tail risks. Allianz's superior capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. is supported by conservative loss reserving, moderate operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and a diversified asset base. The group has strong centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. risk management procedures to monitor and control exposures to catastrophe, investment, credit and market risks. Financial strength is enhanced by access to capital markets, including debt and equity. Allianz maintains substantial market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. and is listed as one of the top 20 companies in Europe, with its stock performance surpassing the DAX index over the last ten years. Outside Germany the group is listed on the London, Zurich and Paris stock exchanges and is currently planning to list on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . The group's strong financial flexibility should enable it to finance most acquisitions effectively without adversely affecting its existing ratings. Financial leverage--currently 24% debt-to-capital on a consolidated basis--remains within the expectations of its rating level and is further tempered by the group's strong fixed charge coverage driven by superior profitability. In addition, the increased debt levels have served to support the group's growth strategies. The group's capital strength is supported by German tax reforms, exempting corporations as of 2002 from capital gains tax on sale of equity holdings. This will allow the group to unlock appreciated equity values embedded Inserted into. See embedded system. in its major participations, and to strategically redeploy re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. the proceeds in its core business areas. While certain operations within the group have currently not achieved expected performance levels, A.M. Best has extended the group rating to these entities recognizing their prospective contribution to the overall group and Allianz's demonstrated commitment to these important market segments. A.M. Best therefore views Allianz's rating outlook as stable. The A++ (Superior) group financial strength rating applies to The Allianz Group and its core property/casualty, life/health and credit group members. The list of the group members can be accessed on the A.M. Best website at http://www3.ambest.com/ratings/amblist.asp. 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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