S&P Assigns Austria’s Wiener Städtische ‘A’ Rating

August 20, 2004

Standard & Poor’s Ratings announced that it has assigned its ‘A’ long-term counterparty credit and insurer financial strength ratings to Austria-based Wiener Städtische Allgemeine Vers. AG (WS AG). The outlook is stable.

“The ratings reflect the financial strength of the Wiener Städtische insurance group (WS), to which WS AG is core, as well as the group’s strong franchise in the Austrian, Czech, and Slovakian insurance markets, strong capitalization, and prudent investment strategy,” noted S&P credit ratings analyst Jörg Ritthaler. “These strengths are partially offset by only adequate–albeit improving–operating performance.”

S&P said the weakness was “largely due to WS’ more recent acquisitions in Central Europe, particularly in Poland, which still need to be fully integrated and made profitable.”

Ritthaler indicated that the “stable outlook is based on Standard & Poor’s expectation that WS will continue to transform its strong competitive position into strong earnings performance.” S&P expects pretax income to be in excess of €80 million ($99 million) in 2004 and 2005″ underpinned by net combined ratios for the group of less than 100 percent, ROA similar to 2003 results for the life segment, and further cost reductions via streamlined processes.

“Risk-based capital adequacy is expected to remain at very strong levels in 2004 and 2005 despite strong organic growth potential. This is likely to be achieved thanks to WS’ current financial flexibility (defined as the ability to source capital relative to capital requirements), which Standard & Poor’s views as strong.”

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