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ALEXANDER & ALEXANDER CP 'F-2' AFFIRMED, REMOVED FROM FITCHALERT -- FITCH FINANCIAL WIRE --

 NEW YORK, March 22 /PRNewswire/ -- Alexander & Alexander Services Inc.'s (NYSE: AAL) `F-2' commercial paper rating is affirmed and removed from FitchAlert where it was placed on 12/31/92. The company has no commercial paper outstanding.
 The `F-2' is affirmed as a result of the company's announcement that it has successfully raised $111 million of additional capital through a private placement of Series A convertible preferred stock. The rating was on alert as a result of a $158 million after-tax charge taken in 1992 relating to the Sphere Drake indemnity and discontinued operations which weakened the company's capital base significantly.
 The additional capital raised has substantially restored Alexander & Alexander's capital base to near recent historical levels. Although the charge was non-cash in nature, the existence of this liability will continue to be reviewed relative to existing reserves and the company's capital base. The long-tail nature of the liabilities is expected to result in a small annual cash impact, as the obligations will take some time to come due. The decision to issue preferred stock reflects management's commitment to maintain a capital structure commensurate with the needs of the brokerage business, as well as liabilities related to discontinued operations.
 During the past two years management has been proactive in improving its balance sheet profile by reducing debt, selling non-strategic assets, and restructuring its operations to improve efficiency. Given Alexander & Alexander's strong and geographically diverse market presence, as well as improving operating performance despite a difficult business environment, the company is well positioned for the eventual turn in the property and casualty cycle. When that happens, the company should be able to achieve return on assets in excess of 250 basis points, in line with its performance during the last peak period in the cycle.
 Alexander & Alexander's liquidity position continues to be adequate, and cash flow to total debt is strong. Additional financial flexibility is also provided by the existence of $200 million in committed bank lines.
 /CONTACT: Lygia X. Campbell of Fitch, 212-908-0695/
 (AAL)


CO: Alexander & Alexander Services Inc. ST: New York IN: INS SU: RTG

TM -- NY088 -- 9240 03/22/93 16:31 EST
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Publication:PR Newswire
Date:Mar 22, 1993
Words:355
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