S&P happy with Promina since listing

Monday, March 29th 2004, 11:41PM

Standard & Poor's has revised the rating outlook on Promina Group to positive from stable, and affirmed the holding company's A- long-term counterparty credit rating.

At the same time, the long-term A insurer financial strength and counterparty credit ratings on the group's general insurance businesses, Vero Insurance and Vero Insurance (New Zealand) (including its rated subsidiaries of AA Insurance, Vero Accident Insurance, and Vero Liability Insurance) have also been affirmed, and their rating outlooks have also moved to positive.

"The outlook revision to positive reflects the strong earnings momentum exhibited by the group and its underlying financial and capital strength. However, Standard & Poor's did not move Promina to a higher credit rating, as the strong earnings momentum has been achieved in a relatively short trading period since the initial public offering in May 2003," Standard & Poor's credit analyst, Paul Clarkson said.

S&P expects that Promina could migrate to a higher creditstanding, but this will depend on consistent earnings, franchise maintenance, and continued strong capital position, which Standard & Poor's will assess post the first-half results of 2004.

As a newly formed listed group, Promina has reported strong earnings for both the half-year results to June 2003 and the full-year results to December 2003, performing stronger than the forecast earnings in the prospectus issued at the time of the IPO.

"Many of our concerns about Promina group's separation from the Royal & SunAlliance have been ameliorated by stability in senior management, maintenance of strong business fundamentals following the adoption of the new trading names, Vero and Asteron, for the intermediated general insurance business and the life insurance business, respectively, along with solid operating performances," Clarkson said.

The life insurance businesses in Australia and New Zealand, although showing less dominant business positions, have also demonstrated strong growth in earnings and supporting diversity in the group earnings.

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