Best Sees No Effect on Ratings from Allianz’s Proposed Restructuring

September 26, 2005

A.M. Best Co. has issued a comment, indicating that the proposed restructuring within Germany’s Allianz AG Group, including the proposed buyout of the minority shareholders of Italian insurer Riunione Adriatica di Sicurta S.p.A. (RAS), scheduled to be completed the first half of 2006, “is unlikely to result in a change to Allianz’s ratings.” The transactions include the conversion of Allianz AG into an SE (Societas Europaea) company and the establishment of a holding company for the German insurance operations (See IJ Website Sept.13).

A.M. Best Co. has issued a comment, indicating that the proposed restructuring within Germany’s Allianz AG Group, including the proposed buyout of the minority shareholders of Italian insurer Riunione Adriatica di Sicurta S.p.A. (RAS), scheduled to be completed the first half of 2006, “is unlikely to result in a change to Allianz’s ratings.” The transactions include the conversion of Allianz AG into an SE (Societas Europaea) company and the establishment of a holding company for the German insurance operations (See IJ Website Sept.13).

“The cash offer for RAS shareholders will increase goodwill in Allianz’s consolidated balance sheet by approximately 3 billion euros ($3.6 billion), part of it in respect of value for RAS’ in-force life portfolio,” said Best. “The cash offer will be financed through a mixture of senior and subordinated debt as well as internal funds.” Best indicated that it doesn’t expect “a significant increase in Allianz’s consolidated financial leverage.”

The rating agency also said it would “reassess the impact of the increase in goodwill on Allianz’s prospective consolidated capitalisation once the transactions have been finalised.”

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