LONDON--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Ingosstrakh Insurance Company SPAO (Ingosstrakh) (Russia). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings of Ingosstrakh reflect its solid risk-adjusted capitalisation, strong business profile in Russia’s insurance market and resilient performance track record. These positive rating factors are partially offset by elevated asset risk, driven by the heightened financial system risk in Russia, and generally challenging conditions in the local insurance market.
Ingosstrakh’s risk-adjusted capitalisation is solid, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supported by the company’s strong internal capital generation and a comprehensive reinsurance programme largely provided by highly rated international reinsurers. The company’s balance sheet strength is subject to volatility due to the low asset quality (by international standards) of Ingosstrakh’s investment portfolio, which is exposed to heightened financial system risk in Russia. Additionally, Ingosstrakh’s subsidiary, Bank Soyuz JSC (Bank Soyuz), could require further capital injections from the insurer.
Ingosstrakh maintains a strong competitive position in Russia’s insurance market, with consolidated life and non-life gross written premiums (GWP) of more than RUB 100 billion (USD 1.6 billion) in 2016, and a place among the top 4 insurers as measured by GWP since 2004. Ingosstrakh’s profile is particularly strong in motor business, with motor hull and compulsory motor third-party liability business accounting for 57% of GWP in 2016.
Ingosstrakh’s operating performance has been somewhat volatile due to fluctuations in its technical results but has improved in recent years. The volatility was due mostly to challenging economic conditions in Russia, as well as Ingosstrakh’s exposure to some large industry losses. The company delivered very strong underwriting results in 2016, demonstrated by a non-life combined ratio of 75.4% (2015: 81.8%). The insurer reported net profit after tax of RUB 13.3 billion (USD 220 million) in 2016, an increase of 30% from the prior year. Ingosstrakh’s strong results were impacted negatively by Bank Soyuz, which reported an after-tax loss of RUB 1.5 billion in 2016 (2015: RUB 3.3 billion loss).
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