S&P Ups Lloyd Adriatico Ratings to ‘AA-‘

August 10, 2005

Standard & Poor’s Ratings Services announced that it has raised its long-term counterparty credit and insurer financial strength ratings on Italy-based composite insurer Lloyd Adriatico SpA (LA) to “AA-” from “A+”, with a stable outlook.

S&P said the upgrade reflects its revision of the company’s status within the Allianz group to core from strategically important. “This is driven by LA’s consistently strong and improving operating performance, improving stand-alone regional competitive position in Italy, improved capitalization, and growing importance within the Allianz group,” stated S&P credit analyst Marco Sidanco.

S&P said the “stable outlook on LA reflects that on its parent, Allianz AG (AZAG; AA-/Stable/A-1+). The ratings and outlook on LA would likely be affected by any change in the ratings or outlook on AZAG.” The report added that the “renewal of the bancassurance agreement with Banca Antoniana Veneta after 2009 could be threatened by future changes in the bank’s shareholding.”

However S&P indicated that the company’s “competitive position would be only marginally affected by the loss of the bancassurance agreement, as in the past few years the growth of life business achieved through LA’s own sales force has been strong (27 percent in 2004), and this is expected to continue.”

Sidanco noted: “LA’s competitive advantages in non-life business are regarded as solid potential for future strong performance, and LA is expected to continue to outperform the market, with a combined ratio below 90 percent in 2005. Earnings from the life business are not expected to significantly increase the contribution to overall profit.”

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