S&P Equalizes Ratings on EULER Group, Hermes, as Merger Nears Completion

February 1, 2002

Standard & Poor’s took steps to equalize the ratings of French-based credit insurance group EULER and Germany’s Hermes Kreditversicherungs-AG (Hermes) following their announcement that they were close to finalizing the terms for combining their operations.

S&P affirmed its ratings on the key operating companies of EULER, including its double-‘A’-plus counterparty credit and insurer financial strength ratings on EULER-SFAC, EULER Trade Indemnity PLC, EULER-COBAC Belgium S.A., EULER American Credit Indemnity Co., and EULER SIAC SpA with a stable outlook.

It raised its long-term counterparty credit and insurer financial strength ratings on Hermes to double-‘A’-plus from double-‘A’. At the same time, Standard & Poor’s affirmed its ‘A-1′-plus short-term counterparty credit rating on Hermes, and announced that they had been “removed from CreditWatch, where they were placed on Sept. 19, 2001 following the announcement of the combination.

“Today’s rating actions constitute an equalization of the ratings on Hermes and EULER, said S&P’s announcement. The action reflects “the strategic importance of EULER & Hermes (the name for the new combined group) to the ultimate parent, Allianz AG (AA+/Stable/A-1+), and the new group’s very strong business position, operating performance, and strong capital adequacy.” S&P indicated that it expected their combination to be completed within the next few weeks “subject to the issuance of a fairness opinion with respect to the transaction price by Deloitte & Touche Corporate Finance.”

EULER is already the world’s leading global credit insurance provider, with a 27 percent market share. It’s €550 million ($$473 million) purchase of hermes will give the new group around a 36 percent market share.

“Allianz AG will remain the controlling shareholder of the new group through its control of EULER & Hermes’ parent, AGF – Assurances Generales de France (AGF; AA/Stable/A-1+), and its 10% direct stake in EULER & Hermes,” S&P’s announcement concluded..

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