S&P Affirms Portugal’s Seguros e Pensoes Ratings

Standard & Poor’s announced that it has removed from CreditWatch and affirmed its ‘BBB+’ long-term counterparty credit and insurer financial strength ratings on the operating entities of the Portugal-based insurance group Seguros e Pensoes (SeP)–including Ocidental Companhia Portuguesa de Seguros de Vida S.A.

It also affirmed its ‘BB+’ long-term counterparty credit rating on SeP’s intermediate holding company, Seguros e Pensoes GERE S.G.P.S. S.A, and assigned all the ratings a negative outlook.

S&P had placed the ratings on CreditWatch last October, “following uncertainties created by a strategic review of operations by SeP’s then parent, the Netherlands-based Eureko insurance group.”

“The affirmation reflects SeP’s improved capitalization following a capital increase of EUR117.4 million (EUR93.8 million cash plus shares) [$123.85 million and $99 million respectively] made on Dec. 27, 2002, upon completion of the group’s sale to its former owner, Banco Comercial Portugues), S.A. (BCP),” said the bulletin.

S&P indicated that the ratings also reflect “the implicit support attributable to SeP from BCP, as well as SeP’s other stand-alone characteristics of an extremely strong domestic business position, offset by a marginal operating performance in recent years.”

It warned, however, that, while it viewed the increased capitalization as a positive development, it “nevertheless expects future support to be limited, particularly in view of BCP’s publicly announced intentions to seek a strategic partner for SeP. ”

“The negative outlook on the entities of the SeP group reflects Standard & Poor’s outlook on the parent, BCP, as well as the need for the group’s operating performance to improve to a position whereby it helps to rebuild capital,” stated S&P credit analyst Peter McClean. The report added that S&P would probably view “the entry of any new partner as being unlikely to have a negative impact on the ratings on SeP.”