S&P Affirms Fireman’s Fund Insurance Company

December 4, 2003

Standard & Poor’s Ratings Services said it affirmed its ‘A+’ counterparty and financial strength ratings on Novato, Calif.-based Fireman’s Fund Insurance Co. (Fireman’s) and related subsidiaries. The outlook remains negative.

“The ratings on Fireman’s are based on the insurer’s good stand-alone franchise profile and improving financial characteristics complemented by the financial flexibility inherent in being a strategically important member of the Allianz AG family,” said Standard & Poor’s credit analyst Michael Gross. “The parent company has demonstrated significant financial support to Fireman’s in recent years, while Fireman’s demonstrates continued operational improvement into late 2003.”

These mutual strengths are partially offset by the challenges Fireman’s faces in generating stronger and more stable earnings as it continues to manage its ongoing as well as discontinued businesses.

The insurer ranks among the top 30 property/casualty writers in the U.S. based on 2002 net premium written and maintained statutory surplus exceeding $2.6 billion as of Sept. 30, 2003. Capitalization is strong, with a capital adequacy ratio of 146 percent as measured by Standard & Poor’s model at year-end 2002. Standard & Poor’s believes the insurer will post good underwriting and earnings improvement in 2003 with a return on revenue of 8 percent-10 percent and a combined ratio of about 100 percent.

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