Česká Pojišťovna rated A- for claims

Česká Pojišťovna rated A- for claims

Duff & Phelps Credit Rating Co. (DCR) released its rating of Česká Pojišťovna (CP), Czech Insurance Company, yesterday: A- for claims paying ability and BBB in domestic/foreign currency debt.
The first rating has to do with CP's ability to pay its clients claims, in full and in time. The second rating has to do with the issuance of an eventual bond series, though none is planned at this time. Duff and Phelps said that both ratings were stable.
It was CP's first rating ever, and Director Ladislav Bartoniček was satisfied with it. "It shows that the problems we have had are in our past, and that we are a healthy institution," he said. The A- rating was the highest CP could receive, because it cannot receive a higher rating than the country Czech Republic, which is rated the same. The BBB rating, said Bartoniček, was 1-3 degrees higher than any other Czech financial institution had been given.
Petr Prokop of Česká Pojišťovna said his company chose Duff and Phelps because it had a Czech partner. The rating took a total of six months and was a joint effort of Duff and Phelps's Prague and London offices.
Though Česká Pojišťovna is not considering issuing credit, CP management said it had the second rating done because of that eventuality in the future. It wanted to keep that door open, just in case it ever needed to issue bonds.
Dr. Jiří Korb, director of Duff and Phelps, said the main strength of Česká Pojišťovna was its dominant position on the market. CP was able to pay 1997 flood claims without too much financial damage. The insurance company had been able to learn from past mistakes and was now "on the right track". It has large reserves, he added. One weakness, he said, was that CP's future market share was bound to decrease, because its monopoly on auto and other vehicle insurance is slated to end, possibly as soon as next year.

George Griffis