S&P Media Release

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

- Primary Credit Analyst: Jeremy Rosenbaum, New York,
(1) 212-438-5260; jeremy_rosenbaum@standardandpoors.com

- Secondary Credit Analyst: David M Zuber, New York,
(1) 212-438-1125; david_zuber@standardandpoors.com

NEW YORK (Standard & Poor's) Dec. 21, 2009-- Standard & Poor's Ratings Services said today it assigned its A/Stable/- counterparty credit and financial strength ratings to Generali USA Life Reassurance Co. (Generali USA.)

The outlook is stable.

Generali USA Life Reassurance Co.
Rationale
The insurer financial strength rating on Generali USA Life Reassurance Co. (Generali USA) reflects the companys established competitive position in targeting relationships with midsize and large domestic life insurers. Other rating strengths include an improving operating performance with low volatility, owing to disciplined underwriting, a senior management team that has executed its chosen strategy, and a conservative investment profile. In addition, although Standard & Poor's Ratings Services views 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. ongoing commitment to Generali USA's operations, which enhances the latter's competitiveness.
These strengths are partially offset by the company.s business concentration risk, relatively low investment yields, and a highly competitive target market, in which Generali USA lacks the scale advantages of established competitors.
Generali USA's operating performance remained strong through Sept. 30, 2009, and exceeded our return on revenue (ROR) expectations of 6.5%, due to better-than-expected mortality results (which the company may not be able to sustain indefinitely). However, we expect the positive earnings trend to continue, as a result of increasing new business volumes and sound overall mortality underwriting.
The companys penetration into its target market has enabled it to grow organically and to improve operating efficiencies; but it also gives rise to the challenges of a more commoditized and competitive environment. Generali USA continues to establish substantial new and expanded business relationships in this target segment while maintaining the preponderance of its existing relationships.
Outlook
The stable outlook reflects our belief that Generali USA will be able to sustain its operating performance at the current levels, with modest growth and low volatility, over the next few years. We also believe that the company will continue to bolster its position in the U.S. mortality reinsurance market, garnering greater market share. Generali USA will continue to benefit from financing cost advantages, due to its relationship with its parent company.
We could change the outlook to positive if the company exhibits an exceptional operating performance or an improvement in its competitive position. However, if its underwriting results deteriorate or market competition increases (either from new entrants or existing players), we could revise the outlook to negative.
We expect Generali USA's total premiums to increase about 10% in 2009, with net new life volume growth decreasing about 10% due to the difficulties direct writers are facing. We expect GAAP net income to increase about 10% in 2009, with results likely to continue benefiting from favorable mortality. The company's capitalization will comfortably support its risk profile and projected growth. This will minimize Generali USA's need to raise debt or require additional capital infusions from AGS. We expect RORs of at least 6.5% in the next three years.

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