Best Announces Rating Actions on AXA Corporate Solutions, AXA Re and Subsidiaries

June 22, 2004

A.M. Best Co has issued three separate bulletins concerning its ratings on several AXA Divisions. It has affirmed the financial strength rating of “A-” (Excellent) of France’s AXA Re Group; placed the financial strength rating of “A-” (Excellent) of AXA Corporate Solutions Insurance Company (ACSIC) of New York “under review with negative implications,” and has withdrawn the financial strength rating of French-based AXA Corporate Solutions Assurance (ACSA) at the request of the company and assigned it an NR-4, “Company Request,” rating.

Best said its rating on AXA Re, also applies to its core subsidiaries, Compagnie Generale de Reassurance de Monte Carlo (CGRM) (Monaco) and AXA Re Asia Pacific Pte. Ltd. (Singapore). The outlook for these entities is stable.

“The rating reflects the expected stabilisation in AXA Re’s operating performance as a consequence of more disciplined, centralised underwriting and the continuing implementation of its restructuring plan, which aims to reduce AXA Re’s cost base,” said Best.

It also noted that the “scheduled transfer of ownership of AXA Re’s U.S. operations to AXA S.A. will enable the company to solely focus on its core reinsurance businesses.” Best said it “expects AXA Re to continue its strict underwriting, which should lead to a combined ratio of around 100 percent and a return on equity in the range of 10 percent to 15 percent in 2004.”

Best said the “transfer of AXA Re’s U.S. operations will imply an absolute capital reduction of EUR 531 million (USD 640 million), but on a risk-adjusted basis, AXA Re’s capitalisation will be maintained.”

ACSIC has ben placed under review as Best no longer considers the company to be a core subsidiary of the AXA Re Group, due in part to the restructuring AXA announced last year, meaning that it “will therefore no longer benefit from AXA Re’s group rating.”

Best said it is “currently reviewing the company’s future role and commitment and support available to the company, including a guarantee agreement.” It expects to complete its analysis of the changes at AXA Re Group at the end of the third quarter of 2004.

As indicated Best’s ratings on ACSA were withdrawn at the request of the company. Best noted that at the “time of the withdrawal, the financial strength rating of ACSA has been downgraded to “B++” (Very Good) from “A-” (Excellent), reflecting the stand-alone characteristics of the company.” The outlook is stable.

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