AM Best Affirms Credit Ratings of INSURANCE COMPANY OF GAZ INDUSTRY SOGAZ

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of INSURANCE COMPANY OF GAZ INDUSTRY SOGAZ (SOGAZ) (Russia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect SOGAZ’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.

SOGAZ’s balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s risk-adjusted capitalisation declined in 2018, following SOGAZ’s acquisition of VTB Insurance, Limited (VTB Insurance); however, as anticipated, the capital buffer recovered at year-end 2019, due to SOGAZ’s strong earnings generation and adequate level of profit retention. SOGAZ’s balance sheet strength also is supported by its robust liquidity, comprehensive reinsurance programme and adequate reserving. A partially offsetting rating factor is the concentration of most of its operations and assets in Russia, which exposes the group to high economic and financial system risk.

SOGAZ has a track record of strong performance reflected in a five-year weighted average return-on-equity of 28.5% and a combined ratio of 85.4% (2015-2019), as calculated by AM Best. AM Best expects SOGAZ’s prospective performance to remain strong, given the excellent underwriting results of the former VTB Insurance book. While the group’s expense ratio has increased post-acquisition, the group plans to seek further expense synergies over the medium term.

SOGAZ is a market-leading insurance group in Russia, with a dominant share in the commercial lines segment. In AM Best’s view, the acquisition of VTB Insurance has improved the group’s market position, product diversification and distribution, particularly in the personal lines segment. SOGAZ’s gross written premiums of RUB 356.2 billion (approximately USD 5.7 billion) in 2019 reflected a 16% share of Russia’s insurance market (life and non-life combined).

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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