AAI Ltd.

The positive outlook on AAI reflects that on Suncorp, and our expectation over the next 24 months that the group will maintain a very strong capital position and solid operating performance, which are resilient to potential earnings headwinds. We may raise the ratings on AAI over the next 12-24 months if the GCP were to strengthen. This could occur if the group is able to leverage its strong market standings across the Australian and New Zealand markets, which would be indicated by: Solid underlying earnings across its businesses; Sustainable growth in customers and earnings across the flagship brands in the P/C sector relative to peers; A net combined ratio near the domestic peers; and Capital adequacy remaining very strong. We

...The ratings on AAI Ltd. reflect the company's solid underlying earnings from a range of market-leading brands across Australia's property/casualty (P/C) sector. AAI is the primary Australian operating company of Suncorp Group Ltd. (A/Positive/--; core operating entities rated 'A+'), which has insurance operations spanning Australia and New Zealand, and provides banking services in Australia. AAI has significant market positions in P/C lines and represents the largest contributor to the group's earnings and risk profile. The ratings on AAI are supported by its balance sheet strength. AAI's financial resources are conservatively managed, with very strong capital adequacy as measured by our insurance capital model. The capital adequacy assessment benefits from AAI's low-risk investment portfolio for technical reserves. The company's comprehensive risk management framework, strong risk controls, and well-developed reinsurance arrangements are also supportive of its creditworthiness. The ratings...

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