LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Ingosstrakh Insurance Company PJSC (Ingosstrakh) (Russia). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Ingosstrakh’s balance sheet strength, which A.M. Best categorises as strong, as well as the group’s adequate operating performance, neutral business profile and appropriate enterprise risk management.
Ingosstrakh’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Prospectively, A.M. Best expects risk-adjusted capitalisation to remain at this level, supported by strong internal capital generation. Offsetting factors for the balance sheet strength assessment are the relatively low (although slightly improved) credit quality of the group’s investment portfolio and the risk that the group may be required to inject further funds into its subsidiary, Bank Soyuz JSC. Additionally, in order to manage its net exposure to large corporate risks, the group relies on reinsurance support.
Ingosstrakh is one of the leaders in the insurance market in Russia, with a strong competitive position in the retail segment. The insurer operates in challenging market conditions with high regulatory and political risks.
However, the regulator recently has announced its plan to gradually liberalise the compulsory motor third-party liability segment, which is a key market for Ingosstrakh. This is expected to improve market conditions and to benefit the company over the medium term.
The group demonstrated a resilient, albeit volatile, level of underwriting performance over the period 2013-2017. Whilst the five-year weighted average combined ratio for the period is a solid 93%, underwriting losses were recorded in 2013 and 2014, largely caused by the unstable macroeconomic conditions in Russia. The group benefited from robust investment returns during this period, driven by the high interest rate environment in Russia. The overall level of profitability is solid, reflected in a five-year weighted average return on capital of 17% over the period 2013-2017. However, operating performance is assessed as adequate driven by the volatility of the performance metrics over the period 2013-2017.
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