S&P changes its mind over National Provident

STANDARD & Poor's, the rating agency that judged National Provident Institution to be 'vulnerable' last year, has changed its mind and declared that the pensions company has a 'good' claims-paying ability.

Last year's rating, which was not requested, prompted squeals of protest from NPI, a mutual office. Other industry experts also questioned S&P's verdict. After an in-depth study of NPI's finances - paid for by NPI - S&P has assigned the company a claims-paying ability of A, indicating good financial strength.

S&P said its analysis of the additional information provided by NPI's management suggests 'appreciable additional strength, even looking at historical results'.

Laurie Edmans, NPI's assistant general manager (marketing), said this was 'as near as we are likely to get them to any form of admission (that the vulnerable rating was wrong)'.

Stuart Shipperlee, S&P's director of business development (Europe), stood by the original assessment: 'I don't think there's any sense of discomfiture. Given the information available, that was pretty much on the money.'

S&P was encouraged by the measures NPI is taking to tackle expenses, one of its earlier concerns. It also considered that the pension company's capital strength improved last year and is likely to improve further.

NPI's A rating is still weaker than that assigned to most other UK life insurers that have paid for a rating of claims-paying ability. Legal & General and Standard Life, for example, are AAA-rated.