S&P may cut Prudential

Standard & Poor's said Prudential plc's A+ long-term counterparty credit rating and Prudential Assurance Co. Ltd.'s AA insurer financial strength rating remain on CreditWatch with negative implications. The ratings were originally placed on CreditWatch on March 1 following news that Prudential had reached agreement with American International Group Inc. to acquire an AIG subsidiary, AIA Group Ltd.

The negative watch remains despite Prudential's termination of the acquisition agreement. The parties were unable to renegotiate the terms of the transaction in response to adverse market developments since the

acquisition was agreed upon in March, S&P said.

The agency said Prudential has incurred material costs in pursuit of the AIA transaction, totaling an estimated €450 million. These costs exacerbate pre-existing pressures on cash flow and funding metrics for its rating level, S&P said.

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