S&P Sees No Effect on Ratings of German Companies Charged with Anti-Trust Violations

April 1, 2005

Standard & Poor’s Ratings Services announced that it is “not considering rating actions on the eight rated companies out of the currently ten on which the German antitrust authority (Bundeskartellamt) imposed fines as published on March 23, 2005” (See IJ Website March 24).

S&P explained that “in essence the authority claimed that the accused parties had acted against antitrust law since mid-1999 by not interfering with each other’s re-underwriting activities and abstaining from competitive offers.”

It listed the rated companies involved as follows:
— Allianz Versicherungs AG (AA-/Negative/–),
— AXA Versicherung AG (AA-/Stable/–),
— Gerling-Konzern Allgemeine Versicherungs-AG (BBB+/Positive/–),
— HDI Haftpflichtverband der Deutschen Industrie VaG (AA-/Stable/–),
— Aachener und Muenchener Versicherung AG (AA/Stable/–),
— R+V Allgemeine Versicherung AG (Api/–/–),
— VICTORIA Versicherung AG (A+/Negative/–), and
— Württembergische Versicherung AG (A-/Stable/–).

“Most of these companies have rejected the allegations and have decided to appeal,” said S&P. “Irrespective of the final outcome of the appeal process, the ratings on the companies named above are not under threat as the amounts in question will not be material enough to affect their capitalization.

“In addition, most of these companies have already set up respective reserves, therefore should fines be imposed these would also not adversely impact earnings.”

S&P added that it “expects the increased scrutiny of the Bundeskartellamt to have fostered effective competition in the industrial fire lines regardless of whether or not there have been offences. Combined with a general weakening of the cycle this might contribute to intensifying competition.”

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