A.M. Best Affirms Ratings of Winterthur Group.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength ratings of A- (Excellent) and the issuer credit ratings (ICR) of "a-" of Winterthur Swiss Insurance Company (Switzerland) and its core subsidiary, Winterthur Life Insurance Company (Switzerland), collectively known as Winterthur Group. The outlook on all ratings is stable.

The ratings reflect Winterthur Group's recovering capitalisation driven by stabilisation and retention of earnings, despite the pressure on life business margins in core markets after almost completing its divestment programme. The main offsetting factor is the remaining uncertainty as to the hybrid equity financing from Credit Suisse Group (Winterthur Group's ultimate parent), after the group's planned flotation in the stock market.

Recovering capitalisation--A.M. Best believes that Winterthur Group's capitalisation will continue to recover at a slower pace than in prior years when the group's capitalisation benefited from its divestments, restrained premium growth and retained profits. Risk-adjusted capitalisation is unlikely to reach the historically high levels during the next two years and will be impacted by the group's position on its post-flotation dividend policy, as well as the decisions to be taken in respect of the re-financing of the hybrid equity currently provided by Credit Suisse Group.

Stabilising earnings--For the next two years financial results are likely to remain stable, at a level slightly above that shown in 2005 (at between CHF 1 billion (USD 0.76 billion) and CHF 1.2 billion (USD 0.92 billion)). The cost management measures are likely to result in further reduction in expense ratio during the next three year, thus offsetting the impact of softening rates in Winterhtur's mature non-life markets. Return on equity for the core Swiss life business, though improving, still remains below the overall group target of 12%.

Strong business position in core markets--A.M. Best believes that, despite the lack of growth potential in Winterthur Group's core markets in Switzerland and Germany (an annualized increase of just below 1.3% of total business as at September 2005), the region remains the main profit generator and maintaining the group's leading position is crucial for its success. Additionally, the group's expansion in Central and Eastern European and Asian markets is bound to continue, given its higher potential for rapid growth and profitability, particularly in the life and pensions segments.

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