S&P Maintains Positive Outlook on NZ’s Simply Insurance

Standard & Poor’s Ratings Services announced that its “B” insurer financial strength rating on Simply Insurance New Zealand Ltd. remains on CreditWatch with positive implications.

S&P explained that Simply Insurance is a subsidiary of the New Zealand Finance company Pacific Retail Finance Ltd. (PRF), which is in the process of being acquired by GE Finance and Insurance (GEFI). S&P has accordingly withdrawn its “BB-” counterparty credit rating on PRF at the company’s request.

GEFI has obtained the approval from regulators to acquire the business and assets of PRF. The requisite regulatory and shareholder approvals for acquisition have also been granted, and the acquisition is effective Jan. 31, 2006.

S&P noted: “All outstanding debenture stock of PRF is expected to be repaid from the proceeds of the sale. Sufficient funds will be placed into a trust to repay all of PRF’s outstanding debentures on or before Feb. 14, 2006. PRF has also ceased issuing new debentures under its debenture stock offer program.”

The rating agency also indicated: “Under GEFI ownership, Simply Insurance will likely benefit from its parent’s stronger business and financial profile.” However, S&P added that on a stand-alone basis, it “expects that the New Zealand insurer’s business profile, at this stage, will support a level of earnings consistent with its ‘B’ category rating.

“The CreditWatch with positive implications indicates that the rating on Simply Insurance could increase. The degree of potential rating uplift in Simply Insurance’s rating will depend on Standard & Poor’s assessment of management plans, how the business and financial profile will change under GEFI ownership, and the degree of integration with, and support from, the new parent.”

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