S&P’s Comments on Fireman’s Fund Insurance Co.

August 30, 2002

Standard & Poor’s commented on Fireman’s Fund Insurance Co. and its related entities (FFIC), saying the double-‘A’-minus counter party credit and financial strength ratings on FFIC remain on CreditWatch with negative implications, where they were placed on Aug. 1, 2002. The double-‘A’-plus counter party credit rating on Allianz AG, FFIC’s ultimate parent, also remains on CreditWatch negative.

The ratings are on CreditWatch to reflect S&P’s concerns about FFIC’s weak (high double-‘B’ range) capital adequacy. FFIC’s capital adequacy has been marred by large underwriting and investment losses over the last eight quarters and continues to hamper the group’s financial strength and earnings capacity despite any past capital contributions received from Allianz AG. S&P’s is also concerned about the potential near-term operational and capital management risks to FFIC related to Allianz being on CreditWatch.

Although S&P’s placed the FFIC ratings on CreditWatch, it was recognized that FFIC was benefiting (albeit modestly) from operational strategies implemented in 2001.

Furthermore, S&P’s has recognized that the integration of Dresdner Bank AG (double-‘A’-minus/WatchNeg/’A-1′-plus) has placed the overall Allianz Group (not just FFIC) in an intermediate-term state of transition. However, because FFIC is currently considered strategically important to Allianz AG, if the ratings on Allianz AG fall two notches to double-‘A’-minus, under S&P’s group methodology, the ratings on FFIC would be lowered one notch to single-‘A’-plus. S&P’s does not expect the ratings on Allianz AG to fall by more than one or two notches.

Prior to the CreditWatch placement, S&P’s had been in discussions with FFIC management concerning its capital adequacy and strategic plans for earnings and operational improvement. Expectations are that FFIC will take strategic initiatives to maintain a 135% capital adequacy ratio based on projected year-end 2002 statutory results and that along with Allianz AG, FFIC will discuss with S&P’s plans for FFIC’s prospective capital, operational and risk management strategies.

S&P’s currently rates FFIC and it’s related entities one rating category than their stand-alone performance would warrant because of support as rated family members of Allianz AG. If capital adequacy expectations are not met, S&P’s would consider FFIC non-strategically important to Allianz AG and would lower the ratings to reflect the absence of the Allianz support.

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