A.M. Best Affirms Rating of Societa Cattolica di Assicurazione - Societa Cooperativa; Assigns Issuer Credit Rating.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and assigned an issuer credit rating of "a" to Societa Cattolica di Assicurazione - Societa Cooperativa (Cattolica) (Italy). The outlook for both ratings is stable.

A.M. Best believes Cattolica's consolidated risk-adjusted capitalisation supports the current rating despite the recent acquisition of the lower capitalised UniOne Assicurazioni S.p.A. (UniOne). Cattolica benefits from a stable portfolio of lower volatility risks focused on life (70% of consolidated gross written premiums) and non life personal lines.

Cattolica's operating performance is likely to remain excellent with an anticipated after tax profit of approximately EUR 130 million (USD 153.4 million) in 2005 (EUR 136 million (USD 160.4 million) in 2004), translating into a return on equity of 14%. Life earnings are likely to remain stable, benefiting from the reduction in minimum guarantees (on average, 2.8% for traditional policies in 2005, down from 3% in 2004), although the growing linked portfolio with generally lower margins limits earnings improvements. Profitability of the non-life technical segment is likely to remain strong with an anticipated combined ratio of approximately 95% in 2005 (from 94.9% in 2004). Cattolica's non-life portfolio consists mainly of motor business(67%), which is experiencing flat premium rates and stable loss ratios.

Cattolica has a distinctive business position as it benefits from one of the largest bancassurance networks in the Italian market and a growing number of tied agents. The life portfolio consists equally of linked policies and policies with minimum guarantees. A.M. Best believes this portfolio is likely to grow approximately 20% to approximately EUR 3.8 billion (USD 4.5 billion) in 2005, driven by strong sales of linked policies as a result of good stock market returns and saving products. Cattolica aims to rebalance its portfolio to non-life segments; through the acquisition of UniOne, Cattolica is likely to write approximately EUR 1.5 billion (USD 1.8 billion) in gross written premiums in 2005, from EUR 1.4 billion (USD 1.7 billion) in 2004.

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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.