S&P Media Release

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Media Release" version - Generali USA Life Reassurance Co. Rated 'A'; Outlook Stable

- Primary Credit Analyst: Robert A Hafner, FSA, New York,
(1) 212-438-7216; robert_hafner@standardandpoors.com

- Secondary Credit Analyst: Rodney A Clark, FSA, New York,
(1) 212-438-7245; rodney_clark@standardandpoors.com

NEW YORK (Standard & Poor's) Jan. 9, 2006-- Standard & Poor's Ratings Services said today it assigned its 'A' counterparty credit and financial strength ratings to Generali USA Life Reassurance Co. (Generali USA.)

The outlook is stable.

"The ratings reflect Generali USA's established competitive position, disciplined underwriting, seasoned senior management team providing continuity and experience, prudent capitalization, conservative investment strategy, and very strong liquidity," explained Standard & Poor's credit analyst Robert Hafner. "In addition, while we view Generali USA as nonstrategic to its ultimate parent, Assicurazioni Generali SpA (AGS; AA/Stable/--), the ratings include one notch of implicit support to reflect AGS's commitment to the operations." Partially offsetting these strengths is the company's increasing focus on the more competitive market segment of midsize and larger insurers rather than its traditional focus on serving small insurers, a relatively low investment yield resulting from its very conservative investment risk profile, and concentration risk because 40% of premium is derived from its top five clients.

Generali USA is a wholly owned indirect subsidiary of AGS, which is Italy's largest insurer. Before commencing reinsurance operations on May 1, 2003, Generali USA was a shell company. Generali USA's current operating model arises from AGS's sale of Business Men'sAssurance Co. of America (BMA; not rated) to Royal Bank of Canada (NYSE:RY; AA-/Negative/A-1+; referred to as RBC) and Generali USA's concurrent acquisition of BMA's entire reinsurance operations on May 1, 2003, through 100% coinsurance and subsequent novation. Since commencing operations, Generali USA's senior management team has primarily consisted of the same executives previously responsible for BMA's reinsurance operations.

The stable outlook reflects Generali USA's solid business prospects and consistent earnings power, which are expected to continue. Exceptional performance or explicit support from AGS would be required to favorably affect the ratings. However, the outlook could berevised to negative should Generali USA be unable to sustain operating margins at expected levels or experience unexpectedly adverse underwriting results as it refocuses its operating strategy on business with midsize and larger insurers.

Generali USA is expected to take advantage of the reduced number of reinsurers in the U.S. and its proven track record to expand its list of clientele and grow its business. Total premiums are projected to increase 11%-15% annually in 2006-2008 including net new life volume growth of more than 11%. Projected growth is expected to be supportable from earnings and existing capital minimizing the need to raise debt or requiring additional capital infusions from AGS. RORs are generally expected to be 5% to 5.5% in the next three years. Generali USA is expected to maintain a capital adequacy ratio of more than 140%, which is expected for its risk profile and the ratings. The company will also maintain its conservative investment profile but incrementally increase investment risk to improve returns as spreads widen and interest rates rise.

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