S&P rates Direct Line BBB+, notes BB

S&P said it assigned a BBB+ issuer credit rating to Direct Line Insurance Group plc and assigned a BB long-term issue credit rating to the restricted tier 1 notes to be issued by the company.

The outlook is stable.

The rating on Direct Line is two notches below that on the core operating entity UK Insurance Ltd. (A/stable/--), reflecting the structural subordination of the holding company's creditors to the core entity's policyholders.

The rating on the bonds is four notches below the long-term rating on the company, reflecting one notch for the notes' subordinated status, one notch for the risk of potential conversion to equity and loss of principal and two notches for the mandatory and optional interest cancellation features.

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