S&P Raises Czech Insurer Ratings To ‘BBB’

November 4, 2004

Standard & Poor’s Ratings Services announced that it has raised its long-term counterparty credit and insurer financial strength ratings on Czech insurer Ceska pojistovna a.s. (Ceska) to “BBB” from “BBB-.”

S&P also raised its long-term senior unsecured debt rating on the Czech koruna 4.0 billion (127.1 million euro) [$163 million] floating-rate bonds issued by Ceska to “BBB-” from “BB+.” Both ratings have a stable outlook.

“The upgrade reflects management’s delivery of administrative improvements as planned, and evidence that suggests that capital adequacy will further improve,” indicated S&P credit analyst David Laxton. “Standard & Poor’s believes that Ceska has successfully centralized its policy administration and claims handling through an extensive transformation project.”

S&P said, “the ratings also reflect Ceska’s continuing strong competitive position and strong operating performance. These factors are offset by the exposure of Ceska’s asset base to concentration risk and non-investment-grade issuers. Ceska is the largest composite insurance company in the Czech Republic (foreign currency A-/Stable/A-2, local currency A/Stable/A-1).”

The rating agency also noted that “neither Ceska’s majority shareholder, Cespo B.V., nor its ultimate parent, PPF Group N.V., are rated or under surveillance by Standard & Poor’s.”

Concerning the stable outlook, the bulletin said it reflects S&P’s “expectation that capital adequacy will strengthen further, that quality of capital will improve, and that Ceska will maintain an appropriate dividend policy. The company is expected to maintain a dominant position in the Czech market for the foreseeable future. Going forward, Ceska is expected to achieve a strong post-tax ROE.”

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