Fitch assigns Liberty Group bonds A+(zaf)

Fitch Ratings said it has assigned Liberty Group Ltd.'s 2 billion rand issue of subordinated unsecured secondary capital callable bonds a national rating of A+(zaf).

Liberty Life's issue is the first of its kind in the South African life insurance sector, as the regulator until now had not allowed any subordinated debt within the capital structure of life companies. Introducing subordinated debt into the balance sheet can have the advantage of increasing policyholder security, although if it is used to replace core equity capital, this can also have the opposite effect, Fitch said.

The rating reflects Liberty Group's very strong business position in South Africa, strength and diversity of distribution, strong new business profit margins and very good operating performance, Fitch said.

Partially offsetting these positive factors, Fitch said it believes the group faces a significant challenge to defend its very strong business position in the context of the very competitive South African life insurance market.

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