Standard & Poor’s Ratings Services announced that it has assigned its “BBB-” long-term counterparty credit and insurer financial strength ratings to CSOB Pojistovna a.s., the Czech Republic-based operating subsidiary of Belgium-based KBC Insurance N.V. (A+/Stable/–), with a stable outlook.
“The ratings reflect the company’s position within the KBC Insurance group, and good capitalization,” stated S&P credit analyst Paul Bradley. “The ratings are constrained by historically marginal operating performance and an underdeveloped competitive position in the non-life market,” he added.
The rating agency noted: “CSOB Pojistovna’s risk-based capital position, as measured by Standard & Poor’s capital adequacy model, is at ‘BBB’ level. The ratings are supported by the ratings on the company’s Belgium-based parent, although Standard & Poor’s categorizes CSOB Pojistovna as a nonstrategically important subsidiary.”
CSOB Pojistovna is 75 percent-owned by KBC Insurance N.V. and 25 percent-owned by Ceskoslovenska Obchodni Banka A.S. (CSOB; BBB+/Stable/A-2). Ultimate ownership rests with the Belgium-based KBC group.
“CSOB Pojistovna’s operating performance has historically been volatile and marginal with a very high level of losses on the non-life portfolio,” said the bulletin. “Although CSOB Pojistovna ranks number five in both the life and non-life insurance markets of the Czech Republic, the company may need to strengthen its current distribution network and brand presence for the non-life segment.”
Bradley indicated that the “stable outlook reflects Standard & Poor’s expectation that the company will maintain its competitive position and strengthen its overall market share. Operating performance is expected to improve through better risk controls and stronger pricing discipline, with ROE improving to about 15 percent for 2005/2006. At the same time, capital adequacy is expected to remain at least at the ‘BBB’ level.”
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