Standard and Poor's Rating
BANCO COMERCIAL PORTUGUES SA
30 September 1999
Standard & Poor's assigns A+ rating to Seguros & Pensoes
Lisbon, September 30, 1999: Banco Comercial Portugues Group (BCP) announced that
Standard & Poor's rating agency has assigned a 'A+' long-term counterparty
credit and insurer financial strength rating to the following entities of
Seguros & Pensoes group: Bonanca Gest, SGPS, BPA Seguros Gest, SGPS and
Ocidental Seguros Gest, SGPS.
According to the rating agency, it has issued the current rating based 'on the
group's extremely strong capitalisation, very strong business position and
strong operating performance'. At the same time, the rating was placed on
CreditWatch with developing implications in response to BCP's bid for Companhia
do Seguros Mundial-Confianca. Seguros & Pensoes, the holding company for the
insurance operations of the BCP Group, operates through four leading brand names
(Ocidental, Bonanca, Atlantico Seguros and Seguro Directo) and is the Portuguese
insurance market leader, with an overall share of 19.5% of total premia as of
June 30, 1999.
In its report, Standard & Poor's considers a major rating factor to be its
'extremely strong capitalisation' as 'consolidated capital available was 1.87
times (x) the capital required on a risk-adjusted basis at year-end 1998 based
on Standard & Poor's capital model'. 'Seguros e Pensoes is a multi-brand,
multi-segmented (company) with an excellent distribution network, and very high
quality customer service. In addition, Seguros e Pensoes is represented in the
major European markets via Eureko' comments the agency, which added 'Following
the take-over of Atlantico by BCP, the management team embarked the group in a
major strategic reorganisation aiming to create the top ranked insurance group
in Portugal. Management is committed to increasing synergies and efficiency
among the group's different brands for which it has created common service
platforms (Auto Gere, Medis Saude and Medis Acidentes)'.
Seguros e Pensoes has shown 'strong operating performance' with a 4-year average
Return on Revenue of 4.3%, Return on Assets at 1.6% and 11.7% return on book
equity. Consolidated pre-tax operating income improved to 12.1 billion Escudos
in 1998 from 7.9 billion Escudos in 1997 despite a very competitive market
environment.
The agency ends its report 'While Seguros e Pensoes is the biggest insurance
group in Portugal, market to which the group is totally committed and with great
business potential, it is significantly smaller than the average European
insurer (....) However, the group's relationship with Eureko could be a
competitive advantage for the development of a European franchise if needed'. In
addition, in what concerns the ratings' outlook, Standard & Poor's states that
'Seguros & Pensoes' capital base will remain extremely strong, at a level
consistent with a triple-'A' rating.'
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