S&P Lowers Ratings on Gerling Re and Related Units

June 19, 2002

Standard & Poor’s announced that it has lowered its counterparty credit and insurer financial strength ratings on Germany’s Gerling-Konzern Globale Ruckversicherungs-AG (GKG), Gerling Global’s main reinsurance unit, and related entities to single-‘A’-minus from single-‘A’-plus.

It also lowered its ratings on Gerling-Konzern Allgemeine Versicherungs-AG (GKA) and Gerling-Konzern Lebensversicherungs-AG (GKL) to single-‘A’ from single-‘A’-plus, and affirmed its single-‘A’-plus long-term counterparty credit and insurer financial strength ratings on the core entities of the GERLING NCM credit insurance group, as well as its short-term ‘A-1’ counterparty credit ratings on Gerling-Konzern Speziale Kreditversicherungs-AG and Gerling Namur Assurances du Credit S.A. .

“The rating action on GKG and related entities follows the announcement by the group holding company Gerling-Konzern Versicherungs-Beteiligungs-AG (GKB) on June 6, 2002, that group management, independent of its search for a strategic partner at the group level, is also considering all strategic options–including an IPO–for its reinsurance operations,” stated Karin Clemens, a director at Standard & Poor’s Financial Services Group in Frankfurt. “As a result, and in line with its group methodology criteria, Standard & Poor’s now considers GKG to be nonstrategic to the Gerling group.”

S&P’s bulletin further explained that “The downgrade on GKA and GKL reflects the group’s continued restructuring efforts to improve its financial and competitive position, which will continue to be challenged by external and internal issues.” It noted the steps gerling has taken to improve profitability, but indicated that, ”

it is likely to take the Gerling group some time before the organization is able to realize its true profit potential.”|”sp, lowers, ratings, on, gerling, re, related, units,

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