Allianz Suisse Versicherungs-Gesellschaft and Allianz Suisse Lebenversicherungs-Gesellschaft Ratings’ Affirmed

July 20, 2006

A.M. Best Co. affirmed the financial strength rating of “A” (excellent) of Allianz Suisse Versicherungs-Gesellschaft (ASV) and Allianz Suisse Lebenversicherungs-Gesellschaft (ASL), both based in Switzerland. The outlook for both ratings remains stable. At the same time, Best affirmed the issuer credit rating of “a” of both companies and has revised the outlook to positive from stable.

The rating actions reflect the companies’ continuing strong business profile in Switzerland, stable risk-adjusted capitalisation and improving financial performance, while ASV benefits from the implicit support of its ultimate parent company, Allianz AG.

Best believes that ASV’s non-life gross premiums written will grow by approximately 3 percent to $1.6 billion in 2006 as the company expands into the small to medium-sized enterprises market. Conversely, Best anticipates ASL’s life gross premiums written to decrease by approximately 2 percent to $1.2 billion in 2006, despite the company’s efforts to increase the sales of the profitable and less capital intensive unit-linked and term insurance products. Best believes that ASL’s ability to grow unit-linked and term business is dependent on its ability to focus its activities following the migration of the life portfolio into a new operating system, which is likely to be completed in 2007.

Best believes that the consolidated risk-adjusted capitalisation is likely to remain stable in 2006 as the impact of higher retained earnings is offset by the increased volatility risk as the companies move a greater proportion of their investments into equities to take advantage of the strongly improved Swiss share market. ASL’s stand-alone risk-adjusted capitalisation is likely to stabilise, following improvements over the last three years, as the company is likely to return to a dividend paying policy in 2006 following retained profits in the last three years.

Best believes that ASV’s non-life financial performance is likely to improve, resulting in a decline of the combined ratio by 1.3 percent to 99 percent. This follows reduced exposure to loss-making contracts in accident and health and property business, as well as the absence of major catastrophe claims, which impacted 2005 earnings $56.9 million due to flood losses in Switzerland and hurricane losses in the United States. Best expects ASL’s life financial performance to stabilise, mainly due to the effect of stricter underwriting in group life business and a further decrease of the average guaranteed interest and conversion rates following the successful demarcation between mandatory and non-mandatory benefits. Best also believes that ASL’s financial performance could improve going forward due to higher interest rates, combined with the Swiss government’s expected decision to decrease the minimum guaranteed interest and conversion rates for mandatory group life products.

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