A.M. Best Affirms Ratings of Allianz Societas Europaea and Its Subsidiaries

  A.M. Best Affirms Ratings of Allianz Societas Europaea and Its Subsidiaries

Business Wire

LONDON -- July 10, 2013

A.M. Best Europe – Rating Services Limited has affirmed the financial strength
rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of
Allianz Societas Europaea (Allianz SE) (Germany) and its subsidiaries. A.M.
Best has also affirmed all debt securities of Allianz SE. (See below for a
detailed listing of the companies and ratings.)

The ratings reflect Allianz SE’s excellent risk-adjusted capitalisation and
strong earnings in 2012 and 2013 to date. Due to its geographic scope and
size, Allianz SE continues to maintain sizeable exposures to peripheral
eurozone sovereign debt (EUR 32 billion at the end of the first quarter of
2013) as well as European financial institutions. However, the group actively
de-risked its asset base in 2012. This de-risking added to the increase in
Allianz SE’s retained earnings resulting in improved capitalisation at
year-end 2012.

Another risk factor is the current low interest rate environment. Although the
record low interest rates on German bonds pose a challenge to Allianz SE’s
life operations, A.M. Best believes that the group can continue to service
investment guarantees on German life products, even if interest rates remain
at their current level for the foreseeable future.

Despite the challenging market conditions, Allianz SE’s profit before tax has
strengthened in the last 18 months, driven by improving motor rates and low
natural catastrophe losses, a solid contribution from the asset management
segment and good life results. With investment income expected to remain
depressed, Allianz SE is focused on reinforcing its underwriting discipline
and reducing the group’s structural complexity. Allianz SE reported strong net
earnings of EUR 1.7 billion in the first quarter of 2013, and it expects to
achieve an operating profit of between EUR 8.7 billion and EUR 9.7 billion for
the full year.

Allianz SE maintains an excellent business profile and benefits from a very
high degree of diversification, both in terms of businesses and markets.
Revenues are expected to increase by roughly 5% in 2013, driven by a flight to
quality in the retail lines and ongoing expansion in growth markets, supported
by the acquisition of Yapi Kredi in Turkey and a distribution agreement with
HSBC covering the Asian markets.

Without a more lasting solution to the eurozone imbalances and macro-economic
conditions in Southern Europe, upward rating actions are unlikely at this
time.

Negative ratings actions could occur if there is a worsening in Allianz SE’s
risk-adjusted capitalisation, which could be the result of investment
write-downs or a deterioration of economic conditions in key territories.

Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and ICR of “aa-”
of Allianz Insurance plc. (United Kingdom). Concurrently, A.M. Best has
withdrawn the ratings since management has requested to no longer participate
in A.M. Best’s interactive rating process.

The FSR of A+ (Superior) and ICRs of “aa-” have been affirmed for Allianz
Societas Europaea and its following subsidiaries:

  *Allianz Lebensversicherungs-AG
  *Allianz Versicherungs-AG
  *Allianz Private Krankenversicherungs-AG
  *Euler Hermes Kreditversicherungs-AG
  *Allianz S.p.A
  *Allianz Global Corporate and Specialty AG
  *Allianz Global Corporate and Specialty FR

The FSR of A (Excellent) and ICR of “a+” have been affirmed for Allianz Risk
Transfer AG.

The following debt ratings have been assigned:

Allianz Finance II B.V. (guaranteed by Allianz SE)—

-- “aa-” on EUR 750 million 3% senior unsecured bonds, due 2028

-- “aa-” on GBP 750 million 4.5% senior unsecured bonds, due 2043

-- “aa-” EUR 500 million 1.375% senior unsecured bonds, due 2018

Allianz SE—

-- “a+” on EUR 1.5 billion 5.625% subordinated bonds, due 2042

The following debt ratings have been affirmed:

Allianz Finance II B.V. (guaranteed by Allianz SE)—

-- “a+” on EUR 2 billion 5.75% subordinated bonds, due 2041

-- “aa-” on EUR 1.5 billion 4.75% senior unsecured bonds, due 2019

-- “aa-” on EUR 1.5 billion 4.0% senior unsecured bonds, due 2016

-- “a+” on EUR 1 billion 6.5% subordinated bonds, due 2025

-- “a+” on EUR 1.4 billion 4.375% perpetual subordinated bonds

-- “a+” on EUR 800 million 5.375% perpetual subordinated bonds

-- “aa-” on EUR 1.5 billion 3.5% senior unsecured bonds, due 2022

Allianz SE—

-- “a+” on USD 1 billion 5.5% perpetual subordinated bonds

-- “a+” on EUR 1.5 billion 5.5% perpetual subordinated bonds

The following debt ratings have been withdrawn due to their maturity and
redemption:

Allianz Finance II B.V. (guaranteed by Allianz SE)—

-- “a+” on USD 2 billion 8.375% undated subordinated bonds redeemed in June
2013

-- “aa-” on EUR 1.5 billion 5.0% senior unsecured bonds matured in March 2013

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
www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to
required disclosures: A.M. Best Europe - Rating Services Limited Supplementary
Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best
Company. 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.

Contact:

A.M. Best Co.
Charlotte Vigier
Senior Financial Analyst
+(44) 20 7626 6264
charlotte.vigier@ambest.com
or
Carlos Wong-Fupuy
Senior Director
+(44) 20 7626 6264
carlos.wong-fupuy@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
 
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