A.M. Best Affirms Rating of Assurances Generales de France.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 14, 2003

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Assurances Generales de France (AGF) and its core subsidiaries. (See list below.) The outlook is negative.

The rating reflects AGF's core status to its ultimate parent, Allianz AG, its excellent business profile and improving operating performance. An offsetting factor is the decline in risk-adjusted capitalisation.

Excellent business profile -- AGF has a leading domestic position. In the non-life sector, AGF is the third-largest player with strong premiums growth largely due to rate increases and the high retention rate. The company is also increasing its involvement in credit insurance, where it has a leading position (37% of the credit market share) since the merger of Euler Group and Hermes Kreditversicherungs-AG in 2002. However, in the life sector, AGF has been gradually losing market share (currently ranks number eight) due in part to failure to renew two large single group policies originally written in 2001.

AGF is also well diversified geographically, with international business accounting for 39.4% of total premiums at September 2003.

Deteriorated capitalisation -- AGF's consolidated risk-adjusted capitalisation remains commensurate with the current rating level after a EUR 700 million (USD 838 million) injection from Allianz AG to offset the significant deterioration in 2002 due to considerable unrealised losses in its equity portfolio and fall in life bonus reserves. The sale of the stake in Credit Lyonnais and the disposals of Banque Entenial and AGF Belgium are also likely to have a positive impact on the consolidated risk-adjusted capital for 2003.

Improving operating performance -- Despite an improvement in AGF's consolidated non-life underwriting performance, overall earnings deteriorated due to significantly lower investment income and declining profit margins from the French life business in 2002.

A.M. Best expects higher earnings in 2003 from further improvements in underwriting performance and increased investment income in part as a result of the EUR 904 million (USD 1 billion) realized capital gains from the sale of the stake in Credit Lyonnais. In the first half of 2003, AGF already increased its profit to EUR 491 million (USD 578 million), a 17% increase from 2002.

Expectation:

-- A.M. Best expects AGF to continue its selective underwriting

strategy in the non-life business and to improve its earnings

to meet the profitability targets set by Allianz. AGF's

risk-adjusted capitalisation is to remain commensurate with

the current rating level. Failure to meet these expectations

could result in the review of AGF's core status.

The financial strength rating of A+ (Superior) applies to the following subsidiaries:

-- Assurances Generales de France IART 

-- Assurances Generales de France Vie

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.