Moody’s Puts Fortis Finance Ratings Under Review

January 29, 2003

Moody’s Investors Service announced that it has placed the guaranteed Aa3 senior and A1 subordinated and junior subordinated debt ratings of Belgian-Dutch financial services group Fortis Finance N.V. “on review for a possible downgrade.”

Also included in the review are the A2 rating for preferred stock and the A3 rating for floating rate equity linked securities, jointly guaranteed by Fortis SA/NV and Fortis N.V., as were the Aa3 insurance financial strength ratings of Fortis Benefits Life Insurance.

Moody’s affirmed the A2 insurance financial strength ratings of John Alden Life Insurance Company, the Prime-1 rating for short-term debt obligations and the Aa3/Prime-1 debt and bank deposit and B financial strength ratings of Fortis Bank and its subsidiaries, which “continue to have a stable rating outlook.”

Moody’s said that its rating action “was prompted by the reduction seen in the solvency in the group’s main insurance units as well as at holding company level, reflecting predominantly the effect of lower equity markets.” It also noted that the “increased levels of financial leverage over the past several years have somewhat weakened the group’s strong debt service capacity,” and added that “the review of the Aa3 insurance financial strength ratings of Fortis Benefits Insurance Company in the U.S. reflects the significant amount of implicit support that the company derives from its ownership.”

The rating agency indicated that its “review, which should be completed in the next two months, will focus on the level, composition and allocation of capital within the group and its insurance businesses, as well as on the level of its financial leverage.” Moody’s also said it would “be looking at the group structure, benefit of diversification and the relative subordination of holding company debt holders vis-a-vis creditors of the operating entities.”

It indicated that “any lowering of its Fortis Finance N.V.’s debt ratings, if warranted, would be limited to a one-notch downgrade.”

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