We have been receiving questions from brokers and clients as to Assetinsure’s exposure to Babcock & Brown (B&B). Consistent with communication previously released to our brokers and clients, we would like to reconfirm the following:

B&B Insurance Pty Ltd (B&B Insurance) holds 50% of the shares in Assetinsure Holdings Pty Ltd (Assetinsure Holdings). B&B Insurance is part of global investment and advisory firm Babcock & Brown (B&B). B&B Insurance is a special purpose entity formed for the investment in Assetinsure Holdings.

B&B Insurance’s investment in Assetinsure Holdings Pty Ltd occurred about five (5) years ago and that investment is small in terms of B&B’s overall asset base. Assetinsure Holdings is the sole shareholder (100%) of Assetinsure Pty Ltd (Assetinsure).

In relation to the current share price volatility of B&B and press reports concerning B&B we note:

• Share price fluctuations of an ultimate shareholder in Assetinsure do not have an adverse affect on Assetinsure’s financial position.
  
  
• Assetinsure is an APRA regulated entity and is properly funded as a stand-alone company. All issued shares are fully paid. In other words, Assetinsure is not owed any funds from an investor such as B&B.
  
  
• APRA measures the solvency by the Capital Coverage Ratio (CCR). Assetinsure’s audited CCR as at 31.12.2007 was 2.59. This is well above market average.
  
  
• Assetinsure has no involvement in any B&B banking arrangements nor has any security been pledged to B&B whatsoever.
  
  
• Assetinsure carries no debt.
  
  
• Neither Assetinsure nor its parent company (Assetinsure Holdings) relies on any funding from B&B. Equally, there are no reinsurance arrangements in place with any B&B related entity.
  
  
• Assetinsure Holdings is equally solidly funded and falls under APRA regulation as a Non Operating Holding Company.
  
  
• B&B does not control Assetinsure either by virtue of its shareholding or Board representation. Assetinsure has a 9 member Board with only 2 being B&B related. The majority are independent directors. Any distribution except out of current year profits requires Board and APRA approval.
  
  
• The only impact that the share volatility of B&B and its related entities has on Assetinsure is by way of Assetinsure’s investments in two B&B satellite funds. At 30 June 2008, those investments represented 3% of investment assets. If it became necessary to fully provide for those investments, it would not compromise Assetinsure’s strong solvency position.
  
  
• The shareholders of Assetinsure Holdings are bound by a shareholders’ agreement. As a result, B&B or any other major shareholder cannot sell their shares without consent by the other major shareholders.