HIH Insurance on CreditWatch Developing

August 22, 2000

Standard & Poor’s has placed its insurer financial strength and counterparty credit ratings assigned to the core operating entities of HIH Insurance Ltd. on CreditWatch Developing following the announcement that HIH is reviewing its personal lines operations with the possibility of entering into a joint venture or sale.

Standard & Poor’s has placed its insurer financial strength and counterparty credit ratings assigned to the core operating entities of HIH Insurance Ltd. on CreditWatch Developing following the announcement that HIH is reviewing its personal lines operations with the possibility of entering into a joint venture or sale.

HIH’s personal lines operations represent more than one-third of the group’s revenue base. The CreditWatch action reflects uncertainty surrounding the possible impending changes to HIH’s business franchise and financial structure as a consequence of the announced reassessment of a significant proportion of HIH’s Australian business.

Furthermore, a joint venture or sale would facilitate some balance-sheet restructuring, and has the potential to impact Standard & Poor’s assessment of the group’s financial structure. It is expected that the CreditWatch will be clarified or resolved in the coming weeks, as HIH’s negotiations progress and details of the company’s planned future structure emerges, Standard & Poor’s said.

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