MOODY’S PLACES LONG-TERM RATINGS OF ALLIANZ GROUP UNDER REVIEW FOR POSSIBLE DOWNGRADE
Moody’s today placed its ratings for the Allianz Group (Aa2 senior debt guaranteed by Allianz AG and see list below) under review for possible downgrade. The rating action also includes the ratings of the Dresdner bank group. Moody’s added that the C- bank financial strength rating and A2 preferred stock at Dresdner remain under review for possible downgrade.
Moody’s commented that it had maintained its negative outlook on the ratings of the Allianz Group at the announcement in March 2003 of the rights issue process, while citing concerns in the short-term over the sustainability and quality of earnings of certain major subsidiaries. Supporting its move to review, Moody’s is increasingly concerned at the performance of some key group entities. Moody’s notes the improved level of underwriting performance in some major non-life areas, with the Group’s combined ratio at under 98% for the first quarter of 2003. However, Dresdner Bank, although showing some improvement in the first quarter, is, in Moody’s view, likely to remain a material drag on the Group’s earnings for some time, given its reliance on the depressed German economy and its exposure to capital markets slowdowns. Secondly, although Moody’s notes positively the improving performance at ‘turnaround’ units such as Fireman’s Fund and Allianz Global Risks, AGF continues to underperform which, given its significant weight within the Group is likely to hold back earnings growth of the Group. In addition, all operations continue to be affected by asset impairments and writedowns, and could potentially continue to do so for the next few quarters.
In terms of capital, Moody’s notes that the Group’s capital position remains relatively strong, as a result of the recent equity raising and rebounds in equity markets since end March 2003. However, more negatively the Group continues to retain significant – albeit reducing – exposure to equity market volatility, such that market falls could again reduce the Group’s capitalisation levels. In addition, the Group’s strong business growth in some areas creates in some cases material levels of financing needs.
Moody’s review, which is likely to be concluded within the next few months, will therefore focus on the ability of the Group to successfully improve the performance of its underperforming business units, as well as the Group’s intentions in terms of managing its business growth relative to its capital base. Moody’s will also examine the Group’s short-term goals in mitigating its risk profile, in terms of asset exposure and business profile.
The following ratings were placed under review for possible downgrade
INSURANCE FINANCIAL STRENGTH RATINGS
AGF Vie: Aa2 IFSR
AGF IART: Aa2 IFSR
Allianz Elementar Versicherungs-AG: Aa3 IFSR
Allianz Elementar Lebensversicherungs-AG: Aa3 IFSR
Allianz Lebensversicherungs-AG: Aa1 IFSR
Allianz Life Insurance Co of North America: A1 IFSR
Allianz Suisse Lebensversicherungs-Gesellschaft: Aa3 IFSR
Allianz Suisse Versicherungs-Gesellschaft: Aa3 IFSR
Cornhill Insurance plc : A1 IFSR
Fireman's Fund Insurance Company (and associated entities): A1 IFSR
Hermes Kreditversicherungs-AG: Aa3 IFSR
Lloyd Adriatico SpA: Aa3 IFSR
Riunione Adriatica di Sicurta SpA: Aa2 IFSR
INSURANCE DEBT RATINGS
Allianz Finance BV: Aa2 senior debt
Allianz International Finance NV: Aa2 senior debt
Allianz Finance II BV : Aa2 senior debt and A1 subordinated debt
Dresdner Bank AG: Aa3 long-term deposit and debt ratings; Aa3 MTN programme; A1 subordinated debt ratings.
Dresdner Bank AG, New York Branch: A1 subordinated debt ratings.
Dresdner Bank Luxembourg SA: A1 long-term deposit and debt ratings; A2 subordinated debt rating.
Dresdner Finance NV: Aa3 guaranteed long-term debt rating; Aa3 guaranteed long-term notes under their MTN programme.
Dresdner International Finance plc: Aa3 guaranteed long-term debt rating.
Dresdner Bank Ireland: A1 deposit ratings.
The Following ratings remain under review for possible downgrade:
Dresdner Bank AG: C- FSR
Dresdner Funding Trusts: A2 preferred stock ratings.
Dresdner Bank Luxembourg: C+ FSR
The following ratings were confirmed with a stable outlook
Allianz AG: P-1 Commercial Paper
Allianz Finance Corporation: P-1 Commercial Paper
Hermes Kreditversicherungs-AG: P-1 short-term insurance financial strength
Dresdner Bank AG: Prime-1 short-term deposit and debt ratings
Dresdner Bank Ireland: Prime-1 deposit and debt ratings and C- FSR.
Dresdner Bank Luxembourg SA: Prime-1 short-term deposit rating.
Dresdner Finance NV: Prime-1 guaranteed short-term notes under their MTN programme
Dresdner US Finance Inc: P-1 short term debt rating.
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