A.M. Best Assigns Group Rating to AXA Reassurance Group.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--July 31, 2000

A.M. Best Co. has assigned a group rating of A+ (Excellent) to AXA Reassurance Group.

The group rating applies to the following companies based on their consolidation into the group: AXA Reassurance S.A., Paris; AXA Reinsurance UK, London; AXA Reinsurance Company, New York and its subsidiaries AXA Re Property and Casualty Insurance Company and AXA Re America Insurance Company; AXA Reinsurance Asia, Singapore; CGRM, Monaco; and SPS Reassurance, Paris.

The rating for SPS Reassurance represents an upgrade from A to A+ based on its established role and contribution to the AXA Reassurance Group. These companies are core subsidiaries and are integral to AXA Re Group's overall strategy, market profile, operating performance and financial strength.

The group rating recognizes the unconditional guarantee from the parent, AXA Reassurance S.A., Paris, France, for all reinsurance business that is written by the rated subsidiaries. In addition, the group rating reflects the centralized underwriting control and integrated operation of AXA Re Group's subsidiaries, which receive capital support from the parent and operate as a single reinsurance unit in terms of underwriting capacity and capabilities. The rating reflects AXA Re Group's position as one of the world's leading broker-oriented reinsurance groups in proportional and non-proportional treaties and the strong financial position derived as a profitable member of the AXA Group.

In a very competitive environment, AXA Re Group follows a profit-oriented strategy as a reinsurer of opportunistic business. The Group provides broad product capabilities, large-lines capacity and an ability to quote and dictate terms in many lines. While maintaining a rigorous underwriting policy, the group is diversifying into new product lines by developing its competence in areas such as program business in the United States, asset-based reinsurance in the life segment, weather index products in the property and casualty line and the management of run-off operations. These products are being offered through a global approach to the customer, focusing on dedicated client managers. The Group maintains excellent capitalization and conservative leverage measures, supported by a sound investment strategy, conservative reserving philosophy and prudent risk management and reinsurance programs. Despite difficult market conditions and increased catastrophe losses, which affected the property risk portfolio in 1999, the decline in net income was softened by the Group's diverse earnings base and good geographic spread.

Partially offsetting the positive rating factors was a decline in earnings and returns and a continued deterioration in underwriting margins since 1997. The Group was less exposed to losses from storms Lothar and Martin in France than most of its competitors, but the loss ratio was still affected by net losses of FRF 212 million. In addition, as a leading property catastrophe reinsurer in the United States, AXA Re Group suffered net losses from hurricane Floyd of FRF 407 million. The combination of these two events accounted for more than a ten-point increase in the combined ratio. To guard against the effect on earnings of potential similar catastrophe losses in the future, AXA Re Group purchased new protections for the U.S. property catastrophe account and a protection for the group balance sheet in 2000.

In a competitive market where profitability is a key issue and insurance, reinsurance and financial services are converging, the AXA group is creating a new organization, AXA Corporate Solutions, to be operational by year-end 2000. AXA Corporate Solutions will integrate the operational entities AXA Re Group, AXA Global Risks and AXA Cessions into a single profit center for global business. While the AXA Re Group expects to gain operational efficiencies and added commercial value from its integration into AXA Corporate Solutions, the implementation of this project represents a managerial challenge. A.M. Best will continue to monitor the developments of the AXA Re Group within the new organization.

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.