LIBERTY GROUP LIMITED - Rating Action on South African Based Insurers and Reinsurers

Rating Action on South African Based Insurers and Reinsurers

LIBERTY GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1957/002788/06)
Instrument Code: LGL02 ISIN: ZAG000097932
Instrument Code: LGL03 ISIN: ZAG000100249
Instrument Code: LGL04 ISIN: ZAG000105784
Instrument Code: LGL05 ISIN: ZAG000122250
Instrument Code: LGL06 ISIN: ZAG000139536
Instrument Code: LGL07 ISIN: ZAG000139544

(“Liberty”) or (“the Issuer”)

Rating Agency Action on South Africa-Based Insurers          and
Reinsurers following the South African Sovereign Downgrade

S&P Global Ratings (“S&P”) has recently taken rating action on
the long-term foreign currency sovereign credit rating on the
Republic of South Africa from 'BBB-/A-3' to 'BB+/B' and on the
local currency sovereign credit rating from 'BBB/A-2' to 'BBB-
/A-3'. S&P also lowered the long-term South Africa national
scale credit rating from 'zaAAA' to 'zaAA-'.           S&P has
subsequently lowered the credit ratings on several of the South
Africa-based insurers and reinsurers. This rating action is
reflective of the sovereign economic conditions.

S&P issues a national scale credit rating for Liberty. In
accordance with paragraph 4.26 of the JSE Debt Listings
Requirements, noteholders are advised that S&P has accordingly
revised the Issuer’s note credit ratings as per below:

Ratings from 'zaAA-' to 'zaA' on deferrable subordinated notes:
-LGL06
-LGL07

Ratings from 'zaAA+' to 'zaA+' on non-deferrable subordinated
notes:
-LGL02
-LGL03
-LGL04
-LGL05

The lower rating reflects S&P’s view that South African insurers
face increased exposure to credit risk within asset portfolios
following the sovereign downgrade, with the increased risk
mitigated by sound balance sheet resilience. S&P also noted that
they believe that the South African insurers would withstand the
stress associated with a sovereign currency default, if one was
to occur.

Bondholders should note that Liberty reported a strong capital
coverage of 2.95X as at 31 December 2016 and remains well
capitalised post the downgrade.      The impact of a sovereign
downgrade had been anticipated for some time by Liberty and the
balance sheet and asset liability position had been structured
to take into account the impact of a sovereign rating downgrade.

For more information, noteholders may view the rating agency’s
website:www.standardandpoors.com/ratingsdirect or    Liberty’s
website: www.libertyholdings.co.za

Johannesburg
12 April 2017

Debt Sponsor
The Standard Bank of South Africa Limited

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