S&P Comments on R&SA Capital Raising

Standard & Poor’s issued a statement following the successful initial public offering of shares in Promina Group Ltd., the Australian and New Zealand operations of the U.K.’s Royal & Sun Alliance Group (See IJ Website May 12), indicating that “the capital release is broadly in line with expectations.”

S&P indicated that R&SA’s current rating, ‘A-/Developing/A-2’ “was dependent on the group successfully completing the IPO during the first half of 2003.” The comment noted that the transaction would raise £555 million ($890 million) in sale proceeds and £137 million ($220 million) in intragroup debt repayments.

“This transaction, combined with the disposal of the U.K. healthcare and assistance business, is confirmation that R&SA is making good progress in addressing the relative weakness of capitalization in the rating profile,” said S&P. “Nevertheless, Standard & Poor’s expects R&SA to continue delivering on schedule the actions outlined on Nov. 7, 2002, in its Operating and Financial Review to improve capital adequacy to a level consistent with a rating in the ‘A’ range. R&SA is also expected to maintain its market position in its key profitable segments and post a combined ratio below 101.5% in 2003.”