A.M. Best Assigns Debt Rating to Allianz' EUR 1.2 Billion Guaranteed Exchangeable Notes.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 18, 2001

A.M. Best Co. has assigned an "aaa" rating to EUR 1.2 billion of 1.25% guaranteed exchangeable notes due 2006, issued by Allianz Finance II B.V., a special purpose financing vehicle wholly owned by Allianz Aktiengesellschaft (Allianz AG), Muenchen, Germany.

The notes are fully guaranteed on an unsubordinated basis by Allianz AG. The ratings on Allianz's existing senior debt have been affirmed, while the A++ (Superior) group financial strength rating is unaffected.

The securities are exchangeable into ordinary shares of RWE.AG--a German utility firm beginning in January 2002--at an initial exchange price per share of EUR 50.16. Upon the exercise of the exchange right, the issuer may pay cash in lieu of shares. In addition, the notes are non-callable for the first three years, and thereafter the issuer may redeem the notes, subject to a 125% provisional call hurdle; any shares outstanding at maturity will be redeemed for cash. Based on current ownership, Allianz's stake in RWE will be reduced from 11.7% to approximately 8% after the exchange. The transaction is a further demonstration of Allianz's financial flexibility as the company is essentially monetizing a portion of its cross shareholdings in other major German companies. This strategic action is enhanced by recent German tax reform which, among other things, allows firms to sell shareholdings without having to pay a capital gains tax in 2002, an approach that Allianz has already successfully employed.

A.M. Best notes that an earlier issue of EUR 2 billion of exchangeable bonds due 2004 that were issued in December 2000 has been successfully hedged, and Allianz was able to reap significant gains while canceling its exposure to the movement of the underlying DAX-30, Germany's stock exchange index.

Proceeds of the current issue will be used to bolster Allianz's capital position following its acquisition of Dresdner Bank earlier this year and provides Allianz with additional financial flexibility for incremental earnings from rate firming in the primary property and casualty markets. Allianz's financial leverage on a pro forma basis--as measured by corporate debt plus hybrids to total capital--remains below 20% and is supported by fixed charge coverage on an IAS basis of approximately 10 times (after minority interests).

Following the World Trade Center attack in September 2001, Allianz recognized net claims of EUR1.5 billion--directly related to the terrorist attack-- in its third quarter results. Despite this sizeable exposure, losses were absorbed by year-to-date net income of EUR 1.3 billion ($2.5 billion before minority interest) as of September 30, 2001.

A.M. Best anticipates that the insurance operations will significantly benefit from the rate hardening in this current cycle, boosting the company's earnings potential over the medium-term.

Through its subsidiaries, Allianz AG provides a broad range of financial services, including property and casualty, life and health and asset management products to a diverse group of domestic and international clients. The group is the second largest insurer in the world with consolidated assets of EUR 959.3 billion and shareholders' equity of EUR 28.7 billion as of September 30, 2001.

The following debt rating was assigned: Allianz Finance B.V. II--

-- "aaa" rating on EUR 1.2 billion 1.25% guaranteed exchangeable

bonds, due 2006

The following debt ratings were affirmed:

Allianz Finance B.V.--

-- "aaa" rating on EUR 767 million 6% guaranteed, due 2003

-- "aaa" rating on EUR 767 million 5.75% guaranteed bonds, due 2007

-- "aaa" rating on DEM 2.0 billion 3% guaranteed exchangeable bonds, due 2003

-- "aaa" rating on EUR 1.6 billion 5% guaranteed bonds, due 2008

-- "aaa" rating on CHF 1.5 billion 3% guaranteed bonds, due 2005

-- "aaa" rating on DEM 1.7 billion 2% guaranteed exchangeable bonds, due 2005

Allianz Finance B.V. II--

-- "aaa" rating on EUR 2 billion 1.25% guaranteed exchangeable

bonds, due 2004

The A++ (Superior) group financial strength rating of Allianz AG Consolidated and its core property/casualty, life/health and credit group members remains unaffected. The list of the group members can be accessed at http://www3.ambest.com/ratings/amblist.asp.

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.