Fitch Ratings, the international rating agency, has affirmed St George Insurance Pte Ltd's (SGI) Insurer Financial Strength (IFS) rating at AA-. The Outlook is Stable.

The rating reflects SGI's effective underwriting policies, prudent reinsurance arrangements and strong risk-based capitalisation. The rating also reflects the financial health of SGI's parent company - St George Bank Limited ("SGB", rated 'A+'), Australia's fifth-largest bank.

SGI is a Singapore-based captive insurance company, which only underwrites SGB business. SGI insures losses arising from defaults on SGB's residential loan portfolio and provides credit enhancement for SGB's residential mortgage-backed securitisation programmes through the Crusade Trust. Despite being a wholly-owned subsidiary, SGI maintains underwriting independence and is not obliged to underwrite all the business that is referred to it by its parent company SGB.

SGI had a risk portfolio of AUS $28.7bn as at 31 December 2004, with a geographical bias to New South Wales, which largely reflects SGB's lending profile. SGI's excellent underwriting quality has been maintained in recent years, as indicated by its very low loss ratio, while very strong capital levels continue to be a hallmark of the company.

SGI meets the stringent capital adequacy requirements of Fitch's risk-based Australian Depression Model. The model measures the extent to which SGI's capital resources are able to withstand a severe and protracted slowdown in the Australian economy. Based on this analysis, SGI is able to comfortably withstand Fitch's AA- stress scenario.