Standard & Poor's has placed its 'A' long-term counterparty credit and insurer financial strength ratings on Casiopea Re SA on CreditWatch with negative implications.

This follows the placement of Casiopea Re's parent, Telefónica, on CreditWatch with negative implications as a result of the group's bid to acquire a 51.1% stake in the share capital of Czech telecoms incumbent Cesky Telecom a.s. (A-/Watch Pos/--).

The CreditWatch placement of Telefónica also reflects its increasingly acquisitive strategy and less conservative financial policy. In particular, Telefónica is pursuing other acquisition interests outside its declared core geographical areas of Latin America and Spain.

The ratings on Casiopea Re are based on its status as the captive reinsurer of Telefónica under Standard & Poor's ratings criteria and, as such, are driven by the ratings on its parent. As the captive reinsurer of the Telefónica group, Casiopea Re forms an integral part of the group's overall risk management strategy.

"The resolution of Casiopea Re's CreditWatch placement is dependent on that of its parent," said Standard & Poor's credit analyst Peter McClean. "The CreditWatch status of Telefónica will be resolved, subject to availability of the relevant information, following a decision by the Czech government on whether Telefónica is confirmed as the winner of the present auction. This decision is expected within one week," he added.

Casiopea Re is the wholly owned, Luxembourg-based reinsurance affiliate of Spanish telecommunications operator Telefónica SA (A/Watch Neg/A-1).