S&P’s Takes Off Watch, Affirms Fireman’s Fund Ratings

Standard & Poor’s has removed from CreditWatch and affirmed its ‘A+’
counterparty and financial strength ratings on Fireman’s Fund Insurance Co. and related entities (FFIC) because of support from the companies’ parent, Allianz AG.

Standard & Poor’s also said that the outlook on these companies is stable.

“Allianz has demonstrated continued commitment to FFIC through its
significant capital contributions and overall risk management,” explained Standard & Poor’s credit analyst Frederick Loeloff. Considering this explicit support, FFIC’s capital adequacy ratio will be about 135 percent for calendar-year 2002, and expectations are that the company will maintain its own prospective capitalization and marketable financial strength at competitive levels, with only limited (if any) additional explicit support derived from its parent.

Standard & Poor’s believes FFIC will benefit from the continued improved pricing environment, its restructured organization, and newly marketed brand equity. These factors should enhance the company’s prospective financial strength and market position in its targeted strategic niches. However, increasing competition, transition execution, and earnings uncertainty with discontinued operations might hamper FFIC’s progress over the next two years.

Barring a large loss event, expectations are that FFIC will post modest
underwriting and earnings improvement.