A.M. Best Places Ratings of Allianz AG's U.S. Subsidiaries Under Review.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 20, 2002

A.M. Best Co. has placed the financial strength ratings of Allianz AG's (Germany) U.S. property/casualty and life insurance subsidiaries under review with negative implications. (See listing of companies below.)

Additionally, A.M. Best has changed the rating outlook on Allianz AG's financial strength rating of A++ (Superior) to negative from stable. (See related press release on Allianz AG.)

While A.M. Best recognizes Allianz AG's recently announced commitment to provide additional funding to Fireman's Fund and believes similar support for the U.S. life operations in the near term is likely, these rating actions reflect the potentially significant ongoing capital needs of these subsidiaries. While A.M. Best believes Allianz AG is able to meet the future capital needs of its U.S. subsidiaries if it chooses, the growth in calls on its capital throughout the group means the degree of this support on an ongoing basis is less certain.

Allianz AG's intention to inject additional capital into its Fireman's Fund subsidiary to strengthen asbestos and environmental (A&E) reserves by $750 million highlights the potential for continued adverse development, particularly given the unpredictable nature of these claims and the evolving litigation climate. Furthermore, over the past two years, volatile investment markets combined with Fireman's Fund's historically aggressive exposure to equity assets have contributed to surplus erosion at the company. Fireman's Fund has pared its stock holdings in recent months, but further investment-related losses are still possible. A.M. Best notes Fireman's Fund has made visible progress in improving its underwriting performance, but also believes the company will continue to face challenges in re-balancing its book of business and restoring underwriting performance to consistently stronger levels. As a result of the performance of Fireman's Fund and the potential impact of adverse future developments at the company, A.M. Best will be reviewing the A++ (Superior) group rating status of Allianz Insurance Company (Burbank, CA), the immediate parent of Fireman's Fund.

Allianz Life Insurance Company of North America's (Allianz Life) (Minneapolis) operating performance and stand-alone capital have come under significant pressure due to surplus strain associated with rapid expansion in its annuity operations, development costs in its smaller business lines and increased investment losses. Allianz AG has supported Allianz Life's capital needs in the past, but A.M. Best believes Allianz Life will require significant ongoing capital support in order to fund its prospective business plans while maintaining a healthy risk-adjusted capital position. A.M. Best also notes that Allianz Life's plans will increasingly concentrate the company's business profile and insurance risk in the individual annuity market. A.M. Best also believes Allianz Life's ability to enhance its current operating platform and attain a leading, broad-based U.S. market position over the foreseeable future may be less certain than previously anticipated, given some of Allianz AG's recent expansion activities.

The ratings will remain under review pending an evaluation of Fireman's Fund's loss reserve adequacy and A.M. Best's continued discussions with management concerning the capitalization and future business plans for each of these companies.

The financial strength ratings of A (Excellent) have been placed under review with negative implications for the following subsidiaries of Allianz AG:

-- Fireman's Fund Insurance Co

-- American Insurance Company

-- National Surety Corporation

-- Interstate Fire & Casualty Co

-- American Automobile Ins Co

-- Chicago Insurance Company

-- Associated Indemnity Corp

-- Interstate Indemnity Company

-- Fireman's Fund Ins Co of OH

-- Fireman's Fund Ins Co of WI

-- American Standard Lloyds

-- Fireman's Fund Cnty Mut Ins Co

-- Fireman's Fund Indemnity Corp

-- Fireman's Fund Ins Co of GA

-- Fireman's Fund Ins Co of HI

-- Fireman's Fund Ins Co of LA

-- Fireman's Fund Ins Co of MO

-- Fireman's Fund Ins Co of NE

-- Fireman's Fund Ins Co of TX

-- Midway Ins Co of Illinois

-- Vintage Insurance Company

The financial strength ratings of A++ (Superior) have been placed under review with negative implications for the following subsidiaries of Allianz AG:

-- Allianz Life Insurance Company of North America

-- Preferred Life Insurance Company of New York

The financial strength ratings of A++ (Superior) have been affirmed with a negative outlook for the following subsidiaries of Allianz AG:

-- Allianz Insurance Company

-- Allianz Underwriters Insurance Company

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.