LONDON--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “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 AM Best categorises as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The rating upgrades reflect the improvement in Ingosstrakh’s operating performance and its stabilisation at a strong level over recent years. As a result of a better operating environment in Russia and Ingosstrakh’s focus on risk selection, the company has reported a solid combined ratio of below 90% in each year since 2015. This follows underwriting losses reported in 2014 and 2013, when results were affected by the weaker performance of the company’s motor book, large losses on its corporate account and an unstable macroeconomic environment in Russia. Despite historical volatility in technical performance, the company’s overall results have been solid, demonstrated by a five-year weighted average return on equity of 18.1% reported over the period 2014 to 2018. AM Best expects Ingosstrakh’s future operating performance to remain strong.
Ingosstrakh’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company is expected to maintain a buffer over the minimum requirements for the strongest BCAR assessment over the medium term to support its growth plans. Ingosstrakh has taken steps to improve the credit quality of its investment portfolio in recent years, partially in preparation for upcoming risk-based solvency regulation in Russia. Nonetheless, the company’s asset base is exposed heavily to high financial system risk in Russia, which is an offsetting rating factor. Additionally, the balance sheet strength assessment is affected negatively by the risk that the group’s banking subsidiary, Bank Soyuz JSC, could require further capital injections due to its vulnerable (although improving) credit profile and history of capital injections.
Ingosstrakh is one of the leading insurance companies in Russia, with a strong competitive position and a wide distribution network. The company has benefited from the partial market liberalisation of the compulsory motor-third party liability (MTPL) segment in 2019, which is one of Ingosstrakh’s key lines of business. Despite the widening of the regulatory tariffs for MTPL, the company is expected to maintain its pricing discipline going forward. Ingosstrakh’s strategy is to focus on investment into data analytics and online services in order to support profitable business growth.
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