S&P Downgrades Indonesian Related Pi Insurance Rtgs

Business Wire, July 21, 1998

MELBOURNE--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/21/98-- Standard & Poor's downgraded its public information ('pi') financial strength ratings on Tugu Insurance Co. Ltd. (Hong Kong) to triple-'Cpi' from double-'Bpi', and Asuransi Central Asia PT) to triple-'Cpi' from single-'Bpi'.

These rating actions follow Standard & Poor's affirmation of the triple-'C'-plus long-term foreign currency and its single-'B'-minus long-term local currency issuer credit ratings on the Republic of Indonesia on July 9, 1998. The ratings were removed from CreditWatch with negative implications, where they were placed Jan. 9, 1998. The outlook is negative.

Tugu Insurance Co.'s financial strength rating has been lowered on the basis of its ultimate state ownership by the Republic of Indonesia, which has a Standard & Poor's sovereign rating of single-'B'-minus for local currency-denominated debt in Indonesia with a negative outlook, and the substantial impact of this rating on Tugu's immediate parent Pertamina. Tugu is a captive insurer for the Indonesia state-owned oil company, Pertamina. On a stand-alone basis, Tugu's balance sheet and earnings profile is supportive of a higher rating, but as a captive insurer, Tugu is highly dependent on business origination from the parent that accounts for 66% of Tugu's premium base. Comfort is derived from the fact that one-third of the company's business is written outside Indonesia, and Tugu is subject to Hong Kong regulatory requirements.

The rating on P.T. Asuransi Central Asia reflects the impact of the country's economic and political turmoil on Central Asia's business base, liquidity, profitability, and investment profile, Standard & Poor's said.---CreditWire

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Michael Vine, Melbourne (61) 3-9250-4542

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