A.M. Best Affirms Rating of Assurances Generales de France; Ratings Remain Under Review.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 23, 2002

A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) of Assurances Generales de France (AGF), France, and its core subsidiaries, Assurances Generales de France IART and Assurances Generales de France Vie.

The ratings reflect AGF's core status to its ultimate parent, Allianz AG, its superior risk-adjusted capitalisation, improving operating performance and superior business profile. The ratings remain under review with negative implications.

Core status--A.M. Best regards AGF as a core entity to Allianz AG. AGF enhances Allianz's geographic presence in addition to providing leading global expertise in a number of specialty lines such as credit insurance and assistance business. In 2001, AGF accounted for 26.0% of the Allianz Group's consolidated net premium income and 30.0% of net income.

Superior risk-adjusted capitalisation--On a risk-adjusted basis, AGF maintains a superior level of capitalisation as measured by the A.M. Best model. AGF has reported consistent growth in capital and surplus since its acquisition by Allianz in 1997, principally through retained earnings. Adjusted capital and surplus has consequently grown by 5.8% on a compound annual growth basis between 1997-2001 to reach EUR 6.9 billion (approximately USD 7.9 billion). Current leverage levels are moderate--13.0% at the end of 2001--and financial flexibility is enhanced by its core status to its parent.

Improving trend in operating performance--Despite the recent spate of high frequency, high loss events--European storms, events of September 11, 2001, and the AZF explosion--AGF has continued to report a bottom line profit (EUR 717 million in 2001 [approximately USD 809 million]) and robust returns on equity and assets (10.9% and 0.8%, respectively). Whilst A.M. Best recognises the challenges AGF faces in terms of competitive pressures and the maintenance of profitability in certain business lines and markets, it believes that AGF is well positioned to meet the return requirements of its parent--15.0% sustainable return on equity.

Superior business profile--AGF has developed a leading position in both the life and non-life sectors of its core market, France. At the end of 2001, it had market shares of 6.0% and 12.0%, respectively, and an overall share of 8.0%. It also has a leading global presence in credit insurance, further enhanced by the 2001 merger between Euler and Hermes, and legal assistance business through the Mondial Assistance operation. AGF has additionally identified a number of core international markets--Netherlands, Spain, Belgium and South America--in which to expand and develop a material presence. Consolidated premium increased by 4.0% in 2001 and is likely to experience further growth in 2002.

Expectations:

-- AGF will remain a core subsidiary within the Allianz Group.

-- Risk-adjusted capital will remain at a similar level to the current year and will not be materially affected by the asset impairment, which is projected for year-end 2002. It will benefit from a EUR 700 million (approximately USD 600 million) subordinated loan from Allianz AG, although leverage levels will not exceed 25.0%.

-- Operating performance will improve, benefiting from the diversity of earnings by business class and location, the use of multi-channel distribution and a focus on adherence to strict underwriting controls and expense and loss management.

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.