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ALEXANDER & ALEXANDER 'F-1' CP AFFIRMED BY FITCH AFTER CHARGE -- FITCH FINANCIAL WIRE --

 ALEXANDER & ALEXANDER 'F-1' CP AFFIRMED BY FITCH AFTER CHARGE
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Jan. 14 /PRNewswire/ -- Alexander & Alexander Services, Inc.'s "F-1" commercial paper rating is affirmed by Fitch. This action follows Alexander & Alexander's announcement of a fourth quarter after- tax charge against earnings of $48 million for restructuring and asset write-downs, producing a net loss for the year. The company is authorized to privately place up to $150 million of commercial paper, and approximately $42 million of commercial paper was outstanding at year-end 1991. The affirmation reflects Alexander & Alexander's continued maintenance of adequate operating cash flow and liquidity relative to moderate debt levels, and overall financial strength following this development.
 Of the total after-tax restructuring charge, approximately 42 percent relates to a business restructuring which will involve some staff and office reductions. The business restructuring is intended to streamline operations to better service client needs and improve operating margins. The balance of the restructuring charge includes a write-down of a note receivable for discontinued underwriting operations, a special reserve for closing an unprofitable operation, and write-downs of acquisition-related intangibles.
 This non-recurring charge is a non-cash item, and therefore should have no impact on the company's ability to service its commercial paper program. The company's financial leverage is estimated to increase moderately following the charge with debt to total capitalization estimated to increase to 34 percent at year-end 1991, compared to 31 percent at year-end 1990 and 32 percent at Sept. 30, 1991. Although the restructuring charge will impact earnings in 1991, the company anticipates cost saving benefits of approximately $9 million in 1992 on an after-tax basis. Although not as easily quantifiable, the business restructuring is also expected to improve Alexander & Alexander's future competitiveness and operating profitability in the marketplace.
 Fitch generally views the restructuring as a positive step in the broker's segmentation strategy for long-term improvement of profit margins. However, given the current soft market for insurance rates in the property and casualty industry, pressure on Alexander & Alexander's earnings will continue during 1992. Fitch continues to monitor contingencies relating to discontinued underwriting operations and a dispute with the Internal Revenue Service, but notes that Alexander & Alexander has reserved for these items to improve its financial flexibility.
 -0- 1/14/92
 /CONTACT: Lygia X. Campbell, 212-908-0500, or David P. Wells, 212-908-0517, both of Fitch/
 (AAL) CO: Alexander & Alexander Services, Inc. ST: New York IN: INS SU: RTG


GK -- NY015 -- 9431 01/14/92 09:42 EST
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Publication:PR Newswire
Date:Jan 14, 1992
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