AAI Ltd.

The positive outlook on AAI reflects that on Suncorp. We expect the group will maintain an excellent capital position and solid operating performance, which will be resilient to potential earnings headwinds, over the next 12-24 months. We may raise the ratings on AAI over the next 12-24 months if Suncorp's GCP strengthens. This could occur if the group is able to better leverage its strong market standing across the Australian and New Zealand markets. Indications of that would be: Solid underlying earnings across businesses; Sustainable growth in customers and earnings across flagship brands in the P/C sector relative to peers; A net combined ratio near the domestic peers; and Excellent capital adequacy across the group. We may revise the outlook

...AAI Ltd. is likely to maintain solid underlying earnings from a range of market-leading brands across Australia's property/casualty (P/C) sector. The insurer 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 is the largest contributor to the group's earnings and risk profile. AAI's balance sheet strength will continue to support its credit profile. The insurer conservatively manages its financial resources and has very strong capital adequacy as measured by our insurance capital model. AAI's capital adequacy assessment benefits from its low-risk investment portfolio for technical reserves. The insurer's comprehensive risk management framework, strong risk controls, and well-developed reinsurance arrangements also support its creditworthiness. The ratings on...

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