At the same time, Standard & Poor's removed the rating from CreditWatch, where it was originally placed on July 30, 2002. The outlook is negative.
The rating actions follow today's announcement that Skandia has completed the transfer of the assets and liabilities of Skandia Link, a Sweden-based subsidiary of Skandia, into the parent company. Skandia is a long-term savings provider with total funds under management of Swedish krona 255 billion ($29 billion) at Dec. 31, 2002, excluding operations in the U.S.
"The upgrade reflects the reclassification of Skandia to a core operating company from a holding company," said Standard & Poor's credit analyst Mark Button. This is based on the receipt of regulatory approval to change Skandia's articles of association in order to permit the company to transact life assurance business, as well as receipt of regulatory approval for the business transfer. It also reflects the more substantial cash flows and assets at Skandia following the transfer of the Skandia Link portfolio to the parent.
The rating on Skandia reflects the group's strong position in unit-linked life assurance in a number of markets, including the U.K. and Sweden; its positive strategic and financial management; and its very strong capitalization. Offsetting factors are the group's recent earnings performance and its concentrated business profile.
"Skandia is expected to continue managing its expenses in line with sales patterns and to deliver on its cost-cutting program. Failure to deliver on these expense management initiatives could result in the rating on Skandia being lowered," said Mr. Button.
Capital adequacy is expected to remain very strong, reflecting a continuation of the Skandia group's policy of maintaining a low-risk liability profile.
"Completion of the sale of American Skandia Inc., the holding company of American Skandia Life Assurance Corp. (A-/Watch Pos/--), which is expected during the second quarter of 2003, will address a number of these negative rating pressures, and is expected to result in the outlook on Skandia being revised to stable," added Mr. Button.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com under Fixed Income in the left navigation bar, select Credit Ratings Actions. Alternatively, call one of the Standard & Poor's Ratings Desks: London (44) 20-7847-7400; Paris (33) 1-4420-6705; Frankfurt (49) 69-33-999-223; Stockholm (46) 8-440-5916.