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Business Editors

MELBOURNE--(BUSINESS WIRE)--Sept. 29, 1998--Standard & Poor's CreditWire 9/29/98--Standard & Poor's today affirmed its double-'A'-plus insurer financial strength and counterparty credit ratings on NRMA Insurance Ltd. (NRMAI), following the announcement of an intended A$371 million takeover bid of SGIO Insurance Ltd. (SGIO) to rival Wesfarmers Ltd.'s bid.

The single-'A'-minus rating on SGIO remains on CreditWatch with developing implications, reflecting uncertainties surrounding its future ownership. The affirmation of the rating on NRMAI reflects the expected limited impact on the company's financial structure, which would result from a successful bid. Further, NRMAI's business profile would benefit from the acquisition of SGIO through the addition of a significant presence in Western and South Australia to NRMAI's existing dominant position in New South Wales.

The existing CreditWatch with developing implications on SGIO (placed Sept. 11) remains; however, the likely outcome in the event of a successful bid by NRMAI is either an affirmation or an upward rating movement. The extent of any rating upgrade would be dependent on the resultant financial and operational structure of NRMAI and SGIO, the degree of integration of the two businesses, and level to which NRMAI might support SGIO. The rating on NRMAI was last affirmed following release of the fiscal 1998 results, which were consistent with NRMAI's rating given the company's very strong business and financial condition. The present double-'A'-plus rating is supported by:

-- Extremely strong level of capitalization, underpinned by total

equity of A$2,293.3 million and solvency of 124.5% at June 30

1998, would enable the purchase of SGIO with minimal impact.

While the mutual status places some limitation on accessing

external capital, this is ameliorated by the existing level of

capitalization, ability to generate retained earnings, and recent

proven ability to raise debt;

-- Acceptable operating performance in the context of a difficult

investment environment; and

-- Very strong business position with dominant market share in its

home state of NSW, and its chosen lines of business.

The acquisition of SGIO would be consistent with NRMAI's strategy to improve geographical diversification, and SGIO's portfolio is broadly consistent with NRMAI's lines of business. Standard & Poor's expects that measures aimed at improving both underwriting and investment performance should continue to underpin a general improvement in NRMAI's operating results in the long term. NRMAI's claims provisioning and financial structure is expected to remain very strong in the near to medium term, while remaining heavily influenced by investment market performance, Standard & Poor's said. ---CreditWire, Copyright 1998, Standard & Poor's Rating Services

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