A.M. Best Affirms Ratings of Allianz Insurance Group and Fireman's Fund; Revises Outlook of Fireman's Fund to Stable From Negative.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and has assigned issuer credit ratings (ICR) of "a" to Allianz Insurance Group (Allianz U.S.) (Burbank, CA), which consists of Allianz Global Risks US Insurance Company and its wholly-owned subsidiary, Allianz Underwriters Insurance Company (Allianz Underwriters). All the above ratings have a stable outlook.

A.M. Best has also affirmed the FSR of A (Excellent) of Fireman's Fund Insurance Company (Fireman's Fund) (Novato, CA) and its intercompany pool participants and reinsured affiliates. This rating outlook has been revised to stable from negative. Concurrently, A.M. Best has assigned ICRs of "a" with a stable outlook.

The Allianz U.S. ratings reflect the solid stand-alone capitalization, explicit parental support provided by its ultimate parent, Allianz A.G. (Munich, Germany), its solid business franchise and improved current and future earnings capabilities in its core industrial risk market.

Offsetting these positive rating factors is the historically poor underwriting performance and sizable portion of the surplus of Allianz U.S. represented by affiliated securities, primarily its 100% ownership in Fireman's Fund, a separately managed operating unit. As a result, the surplus of Allianz U.S. is subject to volatility caused by Fireman's Fund's own operating results.

Somewhat mitigating this last concern is the significant improvement in Fireman's Fund's results and solid earnings from the Allianz U.S. operations. The latter significantly benefits from investment earnings thrown off from sizable loss reserves related to discontinued operations.

The Fireman's Fund ratings reflect its strategic importance within Allianz AG's global operations as demonstrated through the parent's historical financial support and commitment in the form of Keep Well Agreements for 2003 and prior accident year loss reserve development. Given the challenges encountered by Fireman's Fund in the past, this parental commitment is paramount to the group's current ratings, which take into consideration both past and future support. The ratings also consider the increase in surplus over the last two years from better overall operating earnings and capital gains, as well as continued improvement in earnings during 2005.

The FSR of A (Excellent) has been affirmed and ICRs of "a" have been assigned with a stable outlook to Allianz Insurance Group and its following subsidiaries:

-- Allianz Global Risks US Insurance Company

-- Allianz Underwriters Insurance Company

The FSR of A (Excellent) has been affirmed and ICRs of "a" have been assigned with a stable outlook to Fireman's Fund Insurance Company and its following subsidiaries:

-- American Automobile Insurance Company

-- National Surety Corporation

-- The American Insurance Company

-- American Standard Lloyd's Insurance Company

-- Associated Indemnity Corporation

-- Chicago Insurance Company

-- Fireman's Fund County Mutual Insurance Company

-- Fireman's Fund Indemnity Corporation

-- Fireman's Fund Insurance Company of Hawaii Inc

-- Midway Insurance Company of Illinois

-- Fireman's Fund Insurance Company of Georgia

-- Fireman's Fund Insurance Company of Louisiana 

-- Fireman's Fund Insurance Company of Missouri

-- Fireman's Fund Insurance Company of Ohio

-- Fireman's Fund Insurance Company of Wisconsin

-- Interstate Fire & Casualty Company

-- Interstate Indemnity Company

For Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.

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 http://www.ambest.com.