A.M. Best Affirms Rating for Allianz Cornhill

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Allianz Cornhill Insurance plc (Allianz Cornhill) (United Kingdom).

The rating reflects A.M. Best’s view of Allianz Cornhill as a core subsidiary of its ultimate parent, Allianz Aktiengesellschaft, its excellent stand-alone risk-adjusted capitalization and business profile and its improving operating performance. The rating outlook is negative, which is in line with that of its parent.

Excellent capitalization – Allianz Cornhill’s stand-alone risk-adjusted capitalization is expected to be managed at least in the excellent range despite the prospect of higher dividend payments, which are in line with the parent company’s cost of capital requirement.

Improving operating performance – A.M. Best believes that the credible underwriting, claims management and cost-reduction initiatives implemented by Allianz Cornhill should enable the company to report a combined ratio of approximately 95% and a pre-tax return on equity above 15% at year-end 2004. Allianz Cornhill reported a 278% increase in 2003 pre-tax earnings to GBP 152.2 million (USD 270.7 million) and a combined ratio of 95.2%.

Excellent business position – Allianz Cornhill is a leading provider in the UK commercial market and is a class leader in selected personal lines, such as animal health insurance. Although the downward phase of the motor pricing cycle is likely to constrain revenues, growth of approximately 5% is expected in 2004 as the company targets new business opportunities in the small-to-medium enterprise (SME) market and seeks to grow its household account.