S&P Comments on Downgrade of Allianz Risk Transfer

October 11, 2002

In a separate bulletin Standard & Poor’s explained the ratings downgrade of its long-term counterparty credit, insurer financial strength, and insurer financial enhancement ratings for Swiss-based multiline insurer Allianz Risk Transfer (ART) and its Bermuda and Dutch subsidiaries to double-‘A’-minus from double-‘A’, as being a “consequence of the downgrade of its parent, Allianz AG.” (See IJ Website Oct. 10)

Credit analyst Earl Lancaster indicated that “ART continues to demonstrate very strong stand-alone financial characteristics and an improved business franchise since its inception in 1997.” Even though it occupies a firm “strategic niche” it is nevertheless fundamentally dependent on its importance to the Allianz group. “The ratings on ART are not immune to the wider issues affecting the group,” Lancaster concluded.

S&P went on to state that “a further downgrade of the group entities is possible if Allianz fails to turn around the operating performance of its global industrial businesses, fails to implement planned integration synergies of Dresdner Bank with Allianz, or ceases to maintain double-‘A’ level capitalization over the interim period.”

It indicated that should this occur it would result in other members of the group, including ART, being subject to further downgrades.

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