S&P Raises Czech Insurer’s Ratings

December 22, 2006

Standard & Poor’s Ratings Services announced that it has raised its long-term counterparty credit and insurer financial strength ratings on Czech Republic-based insurer CSOB Pojistovna, a. s. to “BBB+” from “BBB-” and has assigned a positive outlook.

“The upgrade reflects the fact that we now consider CSOB Pojistovna to be strategically important to its parent, Belgium-based KBC Insurance N.V. (AA-/Stable/–), and therefore factor in two notches of implied group support into the ratings, reflecting the increasing integration of the company within the KBC group,” explained S&P credit analyst Jelena Bjelanovic.

“The ratings also continue to reflect CSOB Pojistovna’s good capitalization, which is offset by its modest competitive position and historically marginal operating performance,” S&P indicated

“We expect that CSOB Pojistovna’s integration with the parent will progress further (in 2007 and beyond) and will result in a further one notch of support being factored in, at the appropriate time, to reflect its strategic importance to the group,” Bjelanovic continued.

S&P said that on a “stand-alone basis, CSOB Pojistovna will: continue to post improved underlying underwriting results; continue to post favorable pretax results, with a pretax ROE of about 15 percent; maintain its capitalization at the current good level; and continue to deliver on its distribution strategy, particularly in relation to cross selling through group companies.”

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