Business & Finance

S&P Affirms NRMA's Credit Rating

CreditWire - June 12th, 2001

Standard & Poor's today affirmed its double-'A'-plus ratings on NRMA Insurance Ltd. (NRMA - ASX:NRM) and its double-'A'-plus long-term rating on the A$1.5 billion senior unsecured program of NRMA Insurance Group Finance Ltd., and removed them from CreditWatch with negative implications where they were placed on April 24, 2001, following recent instability in management hierarchy.

The affirmation reflects Standard & Poor's assessment that the instability in management hierarchy, culminating with the departure of the chairman and CEO in April 2001, has not impeded the progress and implementation of the group's defined strategy, including business growth and acquisition, operating performance improvements, and capital management. The senior management team remains stable, with the support of the board and an interim chairman and CEO (appointed from within the board and senior management) in place, pending new appointments.

The double-'A'-plus ratings continue to reflect NRMA's excellent business position, with clear market leadership in general insurance in Australia, its associated benefits of economies of scale and expense advantage, along with extremely strong capital position and soundly and conservatively based claims reserves. Its operating performance, while having recently improved, has not historically been supportive of the rating, and the structure and stability of management hierarchy in future will continue to be an influencing rating factor.

The outlook on NRMA is negative, reflecting the potential for further deterioration in capitalization in the medium term as part of the group's capital management strategy to maximize returns and fund its growth targets, Standard & Poor's said.