Ratings Roundup: Pacific International, Resolution, ING

May 6, 2008

A.M. Best Co. has revised the outlook to positive from stable for the ratings of New Zealand’s Pacific International Insurance Limited (PII), and has affirmed PII’s financial strength rating of ‘B+’ (Good) and issuer credit rating of “bbb-“. “The rating affirmations reflect PII’s favorable operating results and persistent improvement in risk-adjusted capitalization,” said Best. “The ratings also consider the company’s stable near-term earnings prospects. The revision of PII’s rating outlook reflects its stable earnings prospects from its niche underwriting expertise and continued strong presence in its core underwriting segment. PII’s capital and surplus on an absolute basis have increased approximately 2.5 times since 2005.”

Standard & Poor’s Ratings Services has lowered its long-term counterparty credit rating on U.K.-based insurer Resolution PLC to ‘BBB-‘ from ‘BBB+’, as well as the junior subordinated debt rating on the Tier 1 notes issued by Resolution to ‘BB’ from ‘BBB-‘. The ratings remain on CreditWatch with negative implications. S&P said “the rating actions follow the completion of the acquisition of Resolution by Impala Holdings Ltd., a subsidiary of Pearl Group Ltd. The ratings remain on CreditWatch with negative implications, pending further discussions with Pearl on its strategic and financial plans.” S&P credit analyst Mark Button noted that Pearl needs to provide substantial dividends and interest; therefore the “two-notch downgrade reflects our opinion that Pearl’s financial policies are more aggressive than those adopted by Resolution.” He indicated there is a potential for “loans to its owners, to service and amortize the debt funding of its shareholders,” which means that “Pearl is likely to operate with an efficient capital structure.”

Standard & Poor’s Ratings Services said that its ratings on the Netherlands-based ING Groep N.V. (currently ‘AA-‘/Stable/’A-1+’) and its affiliates are unaffected by the announcement that it has agreed to acquire CitiStreet LLC for a total consideration of €578 million (US$900 million). “CitiStreet is a leading provider of record keeping and administrative services, counseling and advice programs, and other benefit plan services, primarily in the US” said S&P. “The acquisition is consistent with the group’s strategy, which includes a focus on retirement services as well as banking, investments, and life insurance.”

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