S&P Affirms Reinsurer Secura N.V. ‘A-‘ Ratings; Outlook Stable

July 17, 2003

Standard & Poor’s has affirmed its ‘A-‘ long-term counterparty credit and insurer financial strength ratings on Belgium-based reinsurer Secura N.V., following a review. The outlook is stable.

“The ratings on Secura are enhanced by the provision of a suitably worded guarantee from parent company KBC Insurance N.V. (A+/Negative/–), which has recently reiterated its support for Secura,” said Standard & Poor’s credit analyst Marcus Rivaldi.

Standard & Poor’s stand-alone view reflects Secura’s strong franchise within the Benelux market, refocused strategy, and the generally buoyant reinsurance market conditions. These factors are offset by concerns about the company’s continuing marginal earnings performance, significantly reduced capital adequacy, and the strength of Secura’s business position outside of Benelux.

Secura is a 95 percent-owned subsidiary of the KBC financial services group (KBC), Belgium’s third-largest banking and insurance group, whose main insurance operating company is KBC Insurance.

“Standard & Poor’s expects that KBC will retain its shareholding in Secura for the medium term,” said Rivaldi. “Although efforts to identify a long-term partner for Secura have ceased, they may resurface in the medium term. In the mean time, the guarantee provided by KBC Insurance will remain in place,” added Rivaldi.

In the absence of abnormal market losses, generally buoyant market conditions will help to improve underwriting performance over the next couple of years to the extent that Standard & Poor’s expectations of a combined ratio of less than 110.0 percent will be met in 2003.

Capital adequacy is not expected to recover significantly in the medium term due to the potential for further reserve strengthening, plus the impact of forecast significant premium and more modest reserve growth over the rating horizon.

The competitive activity of larger reinsurance groups will continue to affect Secura’s business position, most noticeably outside of its traditional Benelux area of strength.

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