Fitch affirms TU Europa SA IFS at 'BB'; Outlook Stable

The ratings agency also affirmed both companies' National IFS ratings at 'BBB(pol)'. The outlook on all ratings is Stable.

The two companies form the Poland-based Europa Group (Europa).
The affirmation reflects Europa's sustained good operating performance, which continues to support the rating, experienced management team, disciplined strategy and solid level of risk-adjusted capitalisation, which is consistent with the rating level for both companies.

Fitch views positively the relative dilution in Europa's ownership, following the secondary public offering (SPO) in 2010, and action taken by management to reduce the non-life company's unconsolidated exposure (now 1.2% of total invested assets) to Getin Noble Bank (GNB: 'BB'/Stable). However, given the materiality of GNB within the Getin Group, and considering the concentration of Europa's investment portfolio in GNB assets remains at the current high levels, Europa's ratings will remain strongly linked to GNB's ratings. Fitch notes that EUROPA retains strong ties with GNB, in particular through the high level of exposure of the investment portfolio to GNB (over 80% of total invested assets) and Europa's high reliance on GNB for distribution of its products.

The Stable Outlook partly reflects Fitch's recent rating action on GNB.

The Europa insurance entities are rated on a group approach, with both the non-life and life companies being considered core. The ratings of both companies are currently equalised due to the structural proximity of the life company to the non-life company. Fitch also notes that Europa's management has not ruled out the possibility of providing additional financing to the life company from the non-life company, should it be required, as has happened in the past.

The agency views this support as further justification to equalise the ratings at this time.