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The ratings reflect A.M. Best's view that AGCS AG, AGCS France and AGCS NA are an integral part of their ultimate parent company, Allianz Societas Europaea's (Germany) (Allianz SE) strategy. The AGCS companies contribute a significant part of the consolidated non-life gross premium income of Allianz SE and the companies are the group's primary risk carriers for corporate and specialty risks. Support from Allianz SE is underpinned by a profit and loss absorption agreement provided to AGCS AG. The ratings of AGCS France and AGCS NA reflect the operational integration of these companies into AGCS AG's global processes and management structure.
The stand alone risk-adjusted capitalisation of AGCS AG is likely to remain strong in 2009, underpinned by significant equalisation reserves. AGCS AG's profit and loss absorption agreement requires Allianz SE to meet any net losses incurred at AGCS AG under German GAAP. However, the agreement also requires AGCS AG to upstream all net income to the parent company thereby limiting the accumulation of capital via earnings retention.
A.M. Best expects a resilient underwriting result from AGCS AG in 2009, despite a marginal anticipated deterioration in the company's combined ratio from 83.6% in 2008 and a likely decline in investment income. As a result of these factors, A.M. Best expects AGCS AG's 2009 income before tax and before equalisation reserves to decline to the range EUR 300 million to EUR 320 million in 2009 from EUR 341 million in 2008. The recession has affected the claims environment in 2009, drawing a close to the favourable claims experience that supported performance in 2008.
In A.M. Best's view, AGCS AG's excellent business profile in global industrial lines and specialty lines markets supports its broadly diversified underwriting portfolio. A.M. Best expects AGCS AG's gross premium income to increase slightly from EUR 2.2 billion in 2008, primarily due to portfolio transfers, although partly offset by a decrease in business ceded from other Allianz SE group companies.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
SOURCE: A.M. Best Co.
A.M. Best Co. Analysts: Maik Stolle, +(44) 20 7626 6264 maik.stolle@ambest.com or Miles Trotter, +(44) 20 7626 6264 miles.trotter@ambest.com or Public Relations: Jim Peavy, +(1) 908-439-2200, ext. 5644 james.peavy@ambest.com or Rachelle Morrow, +(1) 908-439-2200, ext. 5378 rachelle.morrow@ambest.com
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