Fireman’s Fund on CreditWatch Neg

August 27, 2001

On Aug. 6, Standard & Poor’s (S&P) placed its “AA-” counterparty credit and financial strength rating (FSR) on Fireman’s Fund Insurance Co. (FFIC) and related entities on CreditWatch with negative implications.

The rating implications reflect S&P’s concerns about FFIC’s continuing weak operating performance, recent decline in capital adequacy to the high “BB” range because of a decrease in policyholders’ surplus of $1.65 billion, largely related to unrealized losses at year-end 2000, and inability over the last two years to execute a successful business model. S&P is also concerned about potential prospective operational and capital management risks to FFIC because of ultimate parent Allianz AG’s completed acquisition of Dresdner Bank AG in July 2001.

Although S&P first lowered its ratings on FFIC in December 2000, it recognizes that FFIC has not had a reasonable chance to benefit from recently implemented operational strategies. S&P also recognizes that the Dresdner acquisition has placed the overall Allianz group in a near-term state of transition.

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