S&P: Singapore Insurers Crisis Hangover Hard to Shake.

Business Editors

SINGAPORE--(BUSINESS WIRE)--Standard & Poor's

March 20, 2001--The Singapore insurance industry has made good progress in recovering from the Asian economic crisis, but the operating environment remains very competitive and insurers are finding that full recovery

"Underwriting and reserving standards remain under pressure for general insurers, with any decline in standards directly affecting the financial strength of companies," said Melissa Mackey, associate director, Financial Services Ratings, Singapore. This is reflected in the rating downgrades of three general insurers in 2001. Ms. Mackey added that for life insurers, significant regulatory change will present strategic challenges. The financial strength of an insurer ultimately determines the ability, level of protection, returns, and service that an insurer can provide.

The outlook for the general insurance sector remains negative, based on sluggish growth, fierce competition, meager increases in premium rates, and underwriting deficits. Underwriting profits have been hard hit by the many years of declining premium rates, and the few rate increases implemented by insurers so far are unlikely to bring about improvement in companies' operating results until 2002. In the context of deteriorating underwriting results and variable investment returns, Standard & Poor's remains concerned about the adequacy of reserving levels for some classes. While not at a level that would threaten solvency, any deficiency would be a drain on future earnings, as claims inadequacy will need to be funded from this source.

The outlook for the life sector is stable, as more favorable underlying operating conditions prevail. Still, given the low interest rate environment and variations in investment earnings, life insurers are facing increasing pressure to lower crediting rates and expense levels. "The burden of historically high bonus rates may lead some insurers to assume increased risk in an attempt to boost investment earnings, which would expose these companies to potential volatility in capital strength," said Ms. Mackey.

In its third Singapore insurance digest, Standard & Poor's profiles the financial strength of 21 of the industry's major participants and provides an update on market trends, and the outlook for its ratings on Singapore insurers. To obtain a copy of the Singapore Insurance Digest, contact Sheila Ong on (65) 239-6320. The life and nonlife commentaries contained in the digest and complete details of ratings can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system. The digest can also be found on Standard & Poor's Web site at www.standardandpoors.com. Select Resource Center, under Reference Tools, select Insurance.

Below is the full list of Standard & Poor's interactive and public information ratings on insurance companies in Singapore:

RATINGS
American Home Assurance Co. Singapore                 AAA
American International Assurance Co. Ltd.             AAA
Asia Insurance Co. Ltd.                               A+
Asia Life Assurance Society Ltd. (The).               A+
AXA Insurance Singapore Pte. Ltd.                     BBpi
AXA Corporate Solutions Asia Pacific Pte. Ltd.        AA
Cosmic Insurance Corporation Ltd.                     BBpi
Great Eastern Life Assurance Co. Ltd..                AA-
Hartford Insurance Co. (Singapore) Ltd. (The)         BBpi
India International Ins. Pte. Ltd..                   BBBpi
Insurance Corporation of Singapore Ltd.               BBBpi
Keppel Insurance Pte. Ltd..                           BBBpi
Liberty Citystate Insurance Co. Ltd.                  BBBpi
NTUC Income Insurance Cooperative Ltd..               AA
Overseas Assurance Corp. Ltd..                        BBBpi
Prudential Assurance Co. Singapore (Pte.) Ltd..       Api
SCOR Reinsurance Asia-Pacific.                        AA-
Singapore Reinsurance Corp.                           Api
Yasuda Fire and Marine Insurance Co. (Asia) Pte. Ltd. AA+

Note: All ratings are local currency counterparty and insurer financial strength ratings. Standard & Poor's full coverage of the Singapore insurance sector is available to insurance industry professionals through RatingsDirect. A free trial may be requested by contacting Valerie Teo in Singapore on (65) 239-6327. ---CreditWire