Fitch affirms PCI

Fitch Ratings said it affirmed Pacific Century Insurance Co. Ltd's A- international insurer financial strength rating and the BBB+ $100 million senior unsecured debt issued by special-purpose vehicle PCI Capital Ltd.

The outlook is stable.

This action follows an announcement by Pacific Century Insurance Holdings Ltd. that accounting errors led to material misstatements of unaudited net profits through the first three quarters of 2005. Net profits for the nine months ended Sept. 30 have been revised downwards to HK$8.01 million from HK$104.97 million.

The rating affirmation reflects Fitch's view that the accounting errors do not materially affect the company's reported shareholders' equity, risk-adjusted capitalization, calculation of value of in-force business, overall investment return or cash position.

That said, Fitch recognized that the accounting errors are potentially indicative of other deficiencies in Pacific Century's financial reporting systems and general risk control framework.

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