A.M. Best Co. announced that while it has affirmed the financial strength rating of A++ (Superior) of Allianz Ag and its core entities, it has assigned them a “negative outlook,” and has placed Allianz’ U.S. subsidiary companies “under review.”
“The negative outlook reflects A.M. Best concerns that an accumulation of adverse developments will further deteriorate Allianz’s consolidated earnings and, therefore, may ultimately affect Allianz’s still superior capitalisation,” said the announcement. It cited the “the ongoing restructuring of Dresdner Bank, the continued extremely weak equity markets and the recent flood claims in Europe,” as well as the necessity to strengthen reserves at Fireman’s Fund, as being the primary reasons for its concern.
In a separate bulletin the rating agency stated that it had “placed the financial strength ratings of Allianz AG’s (Germany) U.S. property/casualty and life insurance subsidiaries under review with negative implications.” While the review primarily affects Fireman’s Fund, Allianz’ biggest U.S. subsidiary, it also includes National Surety, Associated Indemnity, Interstate Fire and Casualty, Allianz Life Insurance Company and other Allianz affiliates.
Best recognized the commitment to provide additional funding to Fireman’s Fund, and stated that it “believes similar support for the U.S. life operations in the near term, is likely,” and stressed “the potentially significant ongoing capital needs of these subsidiaries.”
The announcement indicated that A.M. Best “believes Allianz AG is able to meet the future capital needs of its U.S. subsidiaries if it chooses,” but that “the growth in calls on its capital throughout the group means the degree of this support on an ongoing basis is less certain.”
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