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B.A.T INDUSTRIES $1 BILLION SENIOR DEBT RATED 'A+', COMMERCIAL PAPER 'F-1' BY FITCH -- FITCH FINANCIAL WIRE --

 B.A.T INDUSTRIES $1 BILLION SENIOR DEBT RATED 'A+',
 COMMERCIAL PAPER 'F-1' BY FITCH -- FITCH FINANCIAL WIRE --
 NEW YORK, Oct. 20 /PRNewswire/ -- B.A.T Industries, plc's $1 billion medium-term note program is rated 'A+' by Fitch. Its $3 billion U.S. and 500 million pound sterling commercial paper programs are rated 'F-1'. The credit trend is stable.
 The ratings reflect the magnitude and stability of the company's core tobacco business as well as the underlying strength of its insurance operations. B.A.T is a worldwide leader in tobacco manufacturing, combining excellent geographical and product line diversity with strong brand names. With its combination of U.S. and non- U.S. tobacco blend products, B.A.T is particularly well positioned to benefit from the introduction of its brands into the formerly closed Eastern European and Far Eastern markets. As a result, during 1991 B.A.T's tobacco sales volume grew at a rate approximately three times greater than the overall market.
 The U.S. market continues to shift toward price/value brands where B.A.T's American subsidiary, Brown & Williamson (B&W), controls approximately 20 percent of that sector. B&W accounts for 22 percent of B.A.T's non-insurance revenues and approximately 50 percent of its non- insurance profits. While B.A.T is the third largest tobacco company in the U.S., with an 11% overall market share, on a world-wide basis, excluding the U.S. market, it is as large as Philip Morris and RJR Nabisco combined.
 B.A.T's principal insurance units are Eagle Star Insurance Co. and Allied Dunbar Assurance in the UK, and Farmers Group, Inc. in the U.S. Results of the company's non-life insurance operations in the U.K. experienced considerable weakness in 1990 and 1991. The deterioration was attributable to competitive pricing conditions for property-casualty insurance and poor underwriting experience in U.K. mortgage insurance. Life insurance and North American property-casualty units, however, continued to post steadily rising profits.
 In 1989, financial services trading profit represented almost half of B.A.T's consolidated results. Although the poor performance in the U.K. reduced the contribution to 17 percent of consolidated trading profit in 1991, the start of a recovery and the easing of competitive pressures in the marketplace in certain U.K. operations raised this segment's contribution to one-third of B.A.T's consolidated profit for the first six months of 1992.
 Eagle Star's mortgage insurance line, along with the industry, suffered from inadequate underwriting, a decline in property values, and a weak U.K. economy. The insurer has raised premium rates, implemented tighter underwriting guidelines, and discontinued certain commercial coverages. Substantial loss reserves, predicated on no near-term improvement in claim experience, have been established for adverse development of pre-1992 risks and discontinued product lines. While overall mortgage insurance results will likely continue to produce losses in 1992, the worst appears to have passed and Eagle Star is closely monitoring default, foreclosure, and claim experience of insured loans.
 B.A.T Industries continues to work toward enhancing its leadership positions in selected financial services markets in the U.K. and North America. Capitalization of the company's diverse financial services units ranges from excellent to adequate and overall asset quality remains good. Earnings growth in U.S. insurance and U.K. life insurance operations will continue to help provide steady support for holding company debt service, with an improvement in U.K. general insurance profitability potentially contributing added support in 1993.
 -0- 10/20/92
 /CONTACT: Thomas W. Hoens (tobacco), 212-908-0569; or David Wells (insurance), 212-908-0517, both of Fitch/
 (BTI) CO: B.A.T Industries, plc ST: IN: TOB SU: RTG


SH -- NY090 -- 2360 10/20/92 13:42 EDT
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Date:Oct 20, 1992
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