A.M. Best Affirms Ratings of Zurich Financial Services.

OLDWICK, N.J. -- Third graph, second sentence should read: Prospectively, A.M. Best expects higher dividends paid to shareholders, thus limiting ZFS' ability to further improve capitalisation through retained earnings. In the third quarter of 2006, ZFS announced an unexpected reserve strengthening for asbestos-related reserves in the U.K., although ZFS made an overall small run-off profit on prior year consolidated claims reserves.

The corrected release reads:

A.M. BEST AFFIRMS RATINGS OF ZURICH FINANCIAL SERVICES 

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of "a+" of Zurich Insurance Company, the main operating company of Zurich Financial Services Group (ZFS) (Switzerland), and its subsidiaries. A.M. Best also has affirmed the ICR of "a" of Zurich Financial Services, the ultimate holding company of the ZFS Group and of Zurich Group Holding. Concurrently, A.M. Best has affirmed the ratings of the debt instruments issued or guaranteed by companies within the ZFS Group. The outlook for all the ratings remains stable. (See link below for a detailed listing of the ratings).

The ratings reflect ZFS' strong risk-adjusted capitalisation, in addition to its excellent earnings and business positions in Europe and the United States.

Strong consolidated risk-adjusted capitalisation--A.M. Best expects ZFS'consolidated risk-adjusted capitalisation to remain strong in 2006, factoring higher retained earnings partly offset by lower revaluation reserves due to increased long-term interest rates and by the redemption of preferred securities. Prospectively, A.M. Best expects higher dividends paid to shareholders, thus limiting ZFS' ability to further improve capitalisation through retained earnings. In the third quarter of 2006, ZFS announced an unexpected reserve strengthening for asbestos-related reserves in the U.K., although ZFS made an overall small run-off profit on prior year consolidated claims reserves. A.M. Best believes that potential for adverse reserve development still exists and will continue to closely monitor this.

Excellent overall earnings-- A.M. Best expects ZFS' 2006 earnings to remain excellent and to reach approximately USD 4 billion (compared to USD 3.3 billion in 2005), translating into a return on equity of 18%-19%, as non life underwriting income and run-off business earnings are improving, partly offset by lower life investment income and regulatory settlement costs in the U.S. ZFS' net income already increased by 44% to USD 3.3 billion in the first nine months of 2006. This was mainly driven by non-life business, where the consolidated combined ratio improved by 6.1 percentage points to 94.8% in the first nine months of 2006 as the hurricane season has been particularly mild in the U.S. In addition, the company is benefiting from the continuing focus on underwriting discipline and better distribution efficiencies. In the life sector, new business margins are improving (by three percentage points to 19.3% in the first nine months of 2006 on APE basis), mainly driven by the successful reorganization of the U.K. operations. ZFS continues to derive a substantial part of its net earnings (approximately USD 1.2 billion before tax) from management fees of Farmers Group Inc. despite higher income from other business segments.

Leading business position in Europe and the U.S.--ZFS is likely to maintain its leading position in non life business especially in its core market in Europe (U.K., Germany, Switzerland, Italy and Spain) and in the U.S. despite a competitive environment. A.M. Best expects non life gross premiums written to grow by approximately 2% to USD 34 billion, driven by new business and higher than expected retained business with regard to global corporate and commercial clients in the U.S. However, this is partly offset by softening premium rates in the U.K. In the life business, gross premiums written and unit-linked deposits are likely to increase by approximately 5% to USD 22 billion as a result of higher sales of unit-linked products in the U.K. and Ireland, and specific products for expatriates offered through a ZFS subsidiary on the Isle of Man.

For a complete list of Zurich Financial Services Group's FSRs, ICRs and debt ratings, please visit www.ambest.com/press/122001zurich.pdf.

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.