S&P Global Ratings has revised its outlook to positive from stable on the Polish insurer Group PZU. The agency affirmed its 'A-’ long-term issuer credit and financial strength ratings.
According to S&P Global Ratings the PZU Group has demonstrated a track record of successful execution of its strategy, including the continuation of its insurance outreach and since the acquisition of a stake in Bank Pekao since mid-2017, as well as its expansion into the banking business.
“The group’s leading position in the Polish insurance market remains intact and continues to grant greater flexibility around pricing in insurance business. Despite more moderate growth in 2018 and in first-quarter 2019, the group’s insurance business has sustained stronger performance than that of its peers, even compared with its own historic performance standards. The group posted a consolidated combined (loss and expense) ratio of about 88% and life insurance margin of above 20% in the full year 2018 and first-quarter 2019”, the agency wrote in its press release.
The agency will upgrade the PZU Group outlook within the next 12-18 months if the group fails to sustain its current strong group performance while its risk profile deteriorates below expectations. This could result from increased risk exposures that lead to higher capital and earnings volatility, or if there is a material balance sheet loss event that reduces capital and brings into question the effectiveness of the PZU Group’s risk management.
