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S&P lifts Promina's rating

Thursday 22nd May 2003

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Standard & Poor's Ratings Service has raised the ratings on the principal general insurance subsidiaries of Promina Group today following the successful completion of the initial public offering.

The ratings on the two major Promina subsidiaries, Royal & Sun Alliance Insurance Australia and Royal & Sun Alliance Insurance New Zealand, are raised to 'A' with a stable outlook from 'A-' with a developing outlook.

This rating action also applies to New Zealand subsidiaries AA Insurance, Royal & Sun Alliance Accident Insurance, and Royal & Sun Alliance Liability Insurance.

The rating adjustment follows the successful completion of the IPO, with trading on both the Australian and New Zealand stock exchanges occurring on May 12, 2003, and institutional settlement effected on May 16, 2003.

The IPO has successfully raised A$1.875 billion, including approximately A$100 million of primary capital retained by Promina Group. and trading to date has evidenced a favorable premium to the issue price.

Investor diversity is solid at about 24% retail and 76% institutional, along with 50% domestic versus 50% offshore investment.

Excluding the upper tier 2 perpetual runoff notes of A$100 million for the proposed capitalization of the lenders mortgage insurance subsidiary, the parent Royal & Sun Alliance Insurance Group PLC has completely divested its holding.

"The strong ratings reflect Promina's solid business fundamentals, geographic and product diversity, and well-recognized franchise, which are supported by a strong capital structure and supportive reinsurance arrangements," said Standard & Poor's credit analyst Michael Vine.

"The Promina listing is viewed as successful, raising approximately A$1.7 billion for the Royal & Sun Alliance group, and to date is well supported in the market."

Meanwhile Standard & Poor's Ratings Services today lowered the insurer financial strength and counterparty ratings on Royal & Sun Alliance Lenders Mortgage Insurance Ltd (RSALMI) to 'A-' from 'A+'.

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