S&P Assigns ‘A-‘ Rating to German Surety Insurer

May 6, 2004

Standard & Poor’s Ratings Services announced that it has assigned its “A-” long-term counterparty credit and insurer financial strength ratings to Hanover-based surety insurer Deutsche Kautionsversicherung für die Bauwirtschaft AG (Kautions-AG) with a stable outlook.

“The ratings are based on Kautions-AG’s status as a strategically important member of Germany-based mutual group Vereinigte Hannoversche Versicherungen (VHV group; core entities rated A-/Stable/–), its solid track record of strong operating performance based on sound technical capabilities, and its strong capitalization level,” stated S&P ratings analyst Joerg Ritthaler.

S&P noted, however that “the dependency on a niche market in Germany with limited growth opportunities partially offsets these strengths.”

“The stable outlook reflects Standard & Poor’s expectation that Kautions-AG ‘s overall financial and risk profile will remain materially unchanged, focusing solely on the German construction sector,” Ritthaler continued.

S&P said it “expects operating performance to remain strong with ROR in excess of 15 percent in 2004 and 2005, and the gross combined ratio securely below 95 percent over the same period. In addition, capitalization is expected to remain strong, while at the same time VHV group will continue allowing Kautions-AG to expand its increasing capital base.”

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