Statement on rating

The Slovak Rating Agency grants to Prvá doplnková dôchodková poisťovňa Tatry-Sympatia (Supplementary Pension Insurance Company) the following rating:

Long-term local currency rating	BBB (stable outlook)
Long-term foreign currency rating	BB- (stable outlook)
Short-term rating	S2

The granted long-term rating in the category of transactions in Slovak crowns BBB (stable outlook) is 2 degrees lower than state rating ( A - stable outlook). In the category of forex transactions P DDP Tatry - Sympatia (Supplementary Pension Insurance Company) was granted rating BB- (stable outlook), which is 3 degrees bellow the level of risk of the Slovak Republic (BBB- stable outlook). Short-term rating of Prvá DDP Tatry - Sympatia (Supplementary Pension Insurance Company) is S2, which is the best possible short-term rating for entities reaching long-term rating BBB.

Rationale:

• Prvá doplnková dôchodková poisťovňa TATRY-SYMPATIA (Supplementary Pension Insurance Company) was the first to start meeting the purposes and objectives of supplementary pension insurance in Slovak market. It was and still is the leader in Slovak market of supplementary pension insurance and toward the end of year 2000 its market share represented almost 60%.
• The administrator of Prvá DDP Tatry-Sympatia (Supplementary Pension Insurance Company) is Všeobecná sociálna poisťovňa TATRY, a.s. (General Social Insurance Company). The task of the administrator of Prvá DDP TS is particularly to valorize sources of policyholders. In 2000 the Dutch investment group Trust Banking International Holding whose shareholders are Kardan Group (Israeli investment company quoted on the Tel Aviv Exchange), Deutsche Bank and European Bank for Reconstruction and Development (EBRD) became an important shareholder of the administrator. The change of shareholders means the strengthening of the position in market of supplementary pension insurance and the warranty that financial sources of policy holders are managed by highly professional and capital strong company.
• In the financial area the strength of the insurance company is the planning system. The insurance company regularly reviews the implementation of plans and strategies and manages cash-flows on a weekly basis. The insurance company produces long-term positive income from operations (since 1997), which, after statutory allocation to the reserve fund, is reallocated in favor of accounts of policy holders. In the process of development of investment strategy it applies a diversified approach of risk management.
• The insurance company administers assets the book value of which exceeded SK 2.6 billion . The structure of investment portfolio is heterogeneous, the insurance company manages the risk upon allocation of assets that it administers. It has invested a high share of financial sources in more conservative and low-risk financial instruments.
• We can see some reserves in the process of monitoring the development of the individual titles of investment portfolio. Although monitoring is executed by the administrator, Prvá DDP Tatry-Sympatia would bear eventual losses.
• We perceive a conflict of interests in the area of personnel connection between Prvá DDP Tatry-Sympatia (Supplementary Pension Insurance Company) and Všeobecná sociálna poisťovňa TATRY, a.s., as administrator of Prvá DDP Tatry-Sympatia. The management and control levels are not sufficiently separated.
• As uncertainty of external environment we consider the ongoing reform of social security in Slovakia. From the steps taken so far it is not clear whether the supplementary pension insurance companies will execute the second, mandatory capitalization pillar or the third, supplementary voluntary pillar of pension insurance which will unavoidably influence the potential market of DDP policy holders in Slovakia.
• Marketing activities of wide range which should address the general public are underdeveloped. This is caused by the fact that the insurance company lacks financial capacities for expensive marketing events because it has the legal obligation to keep the level of administration costs. The company realizes these facts and with the view of providing the public with more detail information on the development of the supplementary pension insurance system, as well as on actual results of its activities and new offered products, it started to issue the periodical YOUR SECOND PENSION (a bi-monthly under enclosure to the daily newspaper Pravda). However in the marketing area it has a sophisticated targeted acquisition system in the form of direct visits.

Slovak Rating Agency
Bratislava, 27 November 2001