Royal and SunAlliance credit ratings drop

By NZPA

Friday 8th November 2002

Credit rating agency Standard & Poor's has lowered the ratings on various Australian and New Zealand subsidiaries of British insurer Royal and SunAlliance Group.

The agency dropped the companies' long-term counterparty credit and insurer ratings to A minus from A.

It followed similar rating moves on the operating entities of the British parent company, after the group announced its third quarter results and plans to float the Asia-Pacific operations.

"This rating action is because the ultimate success of the listing will not be known for at least six months, and clarification is required as to the financial strength of a number of unrated Asian general insurance and Australasian life insurance operations that will form part of the IPO (initial public offering)," said Michael Vine, the agency's financial services ratings director.

Royal & SunAlliance Lenders Mortgage Insurance Ltd was lowered to A plus from AA minus.

S&P said that rather than maintain the creditwatch it put on the local entities in October, ratings have been lowered with the parent's ratings, "even though the Australian and New Zealand general insurance operations reflect solid business and financial profiles independent from the Royal and Sun Alliance group".

The agency would reassess the Australasian operations after the initial public offering.

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