S&P Affirms Cornhill Insurance ‘AA-‘ Ratings

December 13, 2001

Standard & Poor’s affirmed its long-term double-‘A’-minus counterparty credit and insurer financial strength ratings on Cornhill Insurance PLC, the U.K. subsidiary of Germany’s Allianz Group.

S&P observed that Cornhill, the fifth largest insurer in the U.K., was strategically important to its parent, occupied a strong business position, and “although recently weakened, strong capitalization over time.” Allianz recently injected £155 million ($223 million) in new capital into Cornhill, and has provided it with extensive reinsurance protection.

S&P also noted that “2001 profitability has been affected by September 11-related losses and falls in equity values.” Cornhill’s 105.2 percent combined ratio is worse than expected, but “is a significant improvement on 2000, when the combined ration reached 116.8%, worse than competitors.” S&P blamed an “ill-judged expansion policy into large commercial lines business and the ‘autumn storms’ in the U.K.” for the problems, and indicated that these would be non-recurring.

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