A.M. Best Affirms Ratings of Allianz Life Insurance Company of North America and Its Core Subsidiary

  A.M. Best Affirms Ratings of Allianz Life Insurance Company of North America
  and Its Core Subsidiary

Business Wire

OLDWICK, N.J. -- July 10, 2013

A.M. Best Co. has affirmed the financial strength rating (FSR) of A
(Excellent) and issuer credit ratings (ICR) of “a+” of Allianz Life Insurance
Company of North America (Minneapolis, MN) and its subsidiary, Allianz Life
Insurance Company of New York (New York, NY), collectively known as Allianz
Life. The outlook for these ratings is stable.

The ratings reflect Allianz Life’s strategic position under its ultimate
parent, Allianz Societas Europaea (Allianz SE) (Germany), its leading U.S.
market position within the fixed index annuity market, its solid risk-based
capital position, well-developed enterprise risk management framework, the
decline in its below investment grade bond exposure and unlevered balance
sheet with no financial leverage as well as its limited use of operating
leverage. The ratings also recognize Allianz SE’s global business profile as a
leading financial services company and the diversification benefits provided
by its core business segments within life/health, property/casualty and
financial services.

These factors are partially offset by Allianz Life’s limited business profile,
which demonstrates a significant concentration in fixed and variable annuity
products, declining premium trends and poor operating performance in its
legacy variable annuity block. Allianz’s Life’s legacy variable annuity block
continues to produce negative results on an International Financial Reporting
Standard basis; however, these losses are declining as the book ages and new
business margins improve overall profitability. Additionally, A.M. Best notes
that new business margins for all core lines—although positively trending—were
relatively modest in 2012 due to low interest rates, and Allianz Life’s
operating profile remains significantly correlated to interest rate and equity
market risk. However, A.M. Best notes that new business margins are beginning
to trend more favorably in response to recently rising interest rates and
product refinements. Allianz Life recently has experienced declining premium
levels primarily as a result of product de-risking changes made in response to
the historically low interest rate environment and increased competition.

Positive rating actions for Allianz Life are not expected in the near term.
However, negative rating actions could occur if there were a considerable
decline in its risk-adjusted capital, operating performance and/or significant
deterioration occurs in the financial strength of Allianz SE.

Concurrently, A.M. Best has downgraded the FSR to B++ (Good) from A
(Excellent) and ICR to “bbb+” from “a” of Allianz Life and Annuity Company
(ALAC) (Minneapolis, MN). At the same time, A.M. Best has withdrawn ALAC's
ratings in response to management’s request to no longer participate in A.M.
Best’s interactive rating process. ALAC’s ratings have been downgraded given
that it has not been used for its intended purpose and Allianz SE has not
issued new policies since acquiring it in 2007. Currently, there are no plans
to do so in the future.

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

A.M. Best Company is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Colleene Parodi
Senior Financial Analyst
908-439-2200, ext. 5095
Rosemarie Mirabella
Managing Senior Financial Analyst
908-439-2200, ext. 5892
Rachelle Morrow
Senior Manager, Public Relations
908-439-2200, ext. 5378
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644
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