S&P Ratings Update

June 6, 2000

Standard & Poor’s announced several changes in ratings and outlook for insurers over the past week. Those concerning non-U.S. companies were as follows:

SCOR Re: S & P took the company off the “credit watch” announced April 14. Despite disappointing 1999 earnings management’s commitment to an “increasingly diversified business mix” with a strong presence in major markets – SCOR is the world’s 10th largest reinsurer – assured the rating agency that its operating performance would recover, and that the diversification efforts would stabilize earnings. All the SCOR company ratings were confirmed at AA- with outlook negative, apparently in the near term, as S & P foresaw a recovery.

“SCOR’s combined ratio is likely to remain between 108 percent and 110 percent in 2000, and to recover from 2001 onwards. Return on revenue (excluding realized capital gains) could remain below 3 percent and ROE between 8 percent and 10 percent, recovering to the 10-12 percent range in 2001. Standard & Poor’s expects capital adequacy to remain in the 160-165 percent range,” the announcement said.

Zurich Australia Ltd.: Ratings on the insurance holding company which controls Australian insurers Zurich Life and Zurich General, a member of the Zurich Financial Services Group, were downgraded from double AA- to A+ and placed on credit watch with negative implications. S&P explained the action as a result of the “ongoing underperformance and resultant diminution in balance-sheet strength stemming mainly from problems associated with long-tail reserving in the general insurance business. Zurich General suffered a pre tax operating loss of U.S. $ 67.5 million last year, due to increasing reserves and the impact of the hailstorm which hit the Sydney area. The credit watch placement indicates that a further downgrade may be made if conditions don’t improve.

Royal Nederland Group: S&P assigned an AA- long-term counterparty credit and insurer financial strength rating. The group of companies are wholly owned subsidiaries of France’s AGF, which in turn is 51 percent owned by Germany’s Allianz. The ratings reflect the extremely strong capitalization of these two companies S&P said. The minus designation was applied because the company has higher operating expenses than most Dutch insurers and operate is a very competitive market.

ABB Power Insurance Ltd.: S&P withdrew the ratings on the insurer which due to the transfer of ownership to France’s ALSTOM S.A. announced in April. Asea Brown Boveri, the giant engineering firm, originally established ABBPIL as a captive in the Channel Islands. S&P said it doesn’t have sufficient information on ALSTOM to rate the company, but felt its financial strength was “significantly below its rating level, but within the secure rating categories.”

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