S&P Raises Winterthur Swiss Ins. Co. Rtgs; OtlkRevsd.

Business Editors

LONDON--(BUSINESS WIRE)--Standard & Poor's

March 24, 2000-- Standard & Poor's today upgraded the counterparty credit and financial strength ratings of Winterthur Swiss Insurance Co. (Winterthur) and its core captive reinsurance subsidiary Vitodurum Insurance

The upgrade reflects the now very close integration of Winterthur and Credit Suisse (double-'A'/Stable/'A-1'-plus), which is expected to yield significant synergies in terms of distribution and cross-selling. Further rating factors are Winterthur's very strong business position in its domestic market, consistently very strong operating performance in Switzerland, and very strong financial flexibility being part of the Credit Suisse Group. These strengths are partially offset by weak earnings streams from Winterthur's international operations, particularly the non-Swiss nonlife personal lines business, and by capitalization, which, although strong on a risk-based analysis, is below the current rating level.

Winterthur Swiss Insurance Co., is both the Winterthur group's holding company and an operating company. In December 1997, Winterthur became part of the Credit Suisse group, the second-largest financial services group in Switzerland, and the sixth-largest in Europe, with total consolidated assets of Swiss franc (SFr) 722.7 billion (US$438 billion).

Major rating factors:

-- Winterthur benefits from the excellent financial flexibility of the Credit
Suisse Group, as well as having operational synergies in both domestic retail
life and nonlife, and multinational corporate business. Integration of the
group's banking and insurance activities has been progressing significantly
over the past two years, and is expected to yield significant synergies in
terms of distribution and product development. To further accelerate this
process, Credit Suisse recently combined its retail and insurance business in a
new financial services division headed by Winterthur's chief executive officer,
Thomas Wellauer.

-- Winterthur benefits from a very strong business position in its domestic
market. The company is the largest nonlife insurer, and the second-largest life
insurer in Switzerland, with market shares of 22% and 25% respectively.
Although deregulation has led to increased competition in the market,
Winterthur is able to take advantage of this to leverage its multidistribution
capabilities, which include tied agents, direct sales, and the domestic retail
banking network of Credit Suisse. Winterthur's consolidated gross premiums
written were SFr28.2 billion at year-end 1999.

-- Winterthur has demonstrated strong underlying operating performance, and has
reduced its dependency on realized capital gains in the past two years. The
core insurance earnings performance in the Swiss domestic market continues to
drive Winterthur group results, whereas a number of international subsidiaries
have been diluting results. Net income increased by 14% in 1999 to SFr1.2
billion, with adjusted return on equity a strong 9% on a reported basis.

Risk-based capitalization at the Winterthur group level, although strong, is marginally below the rating level as measured by Standard & Poor's risk-based capital model.

OUTLOOK: STABLE

Group premium income is expected to increase by at least 8% per year. Emphasis will remain on asset accumulation businesses, and will put greater pressure on the personal lines nonlife businesses outside of Switzerland to achieve target rates of return. Earnings performance will continue to improve, benefiting from Winterthur's strong focus on expenses and repricing of inadequate tariffs. Capital will be maintained at a single-'A' level, and Winterthur--as part of the Credit Suisse Group--will have access to a further pool of capital, either through the ultimate parent, or through the capital markets should the need arise, Standard & Poor's said. -- CreditWire