The CreditWatch placement reflects our view that WARTA could be classified as a strategically important subsidiary for Talanx once the transaction is completed. WARTA could benefit from up to three notches of implicit group support according to our group methodology.
The ratings currently incorporate one notch of implicit group support from existing parent company KBC Insurance N.V. (A-/Stable/--; core insurance operations rated A/Stable/--), reflecting our view of continued parent support until KBC Group disposes of WARTA.
The ratings on WARTA continue to reflect our view of its good and improved operating performance seen in an improved net combined ratio of about 96% (2010: 116%) in the first three quarters of 2011; good competitive position with second-largest market share in Poland; strong capitalization, and strong investments and liquidity.
Standard & Poor's expects to resolve the CreditWatch placement at the completion of the transaction, which we expect to take place in the second half of 2012.