AM Best Revises Issuer Credit Rating Outlook to Positive for Ingosstrakh Insurance Company PJSC

LONDON--(BUSINESS WIRE)--AM Best has revised the outlook of the Long-Term Issuer Credit Rating (Long-Term ICR) to positive from stable and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” (Good) of Ingosstrakh Insurance Company PJSC (Ingosstrakh) (Russia). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Ingosstrakh’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The revised Long-Term ICR outlook to positive reflects continued improvement in the group’s balance sheet strength, helped by good internal capital generation and an improvement in the credit quality of its assets. In addition, AM Best does not expect Ingosstrakh’s banking subsidiary, Bank Soyuz JSC, to require further capital injections from the group based on its improved financial position.

Ingosstrakh’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the group to maintain a buffer over the minimum guideline for the strongest BCAR assessment over the medium term, supported by full earnings retention. Ingosstrakh has improved the credit quality of its investment portfolio over the past few years, partially in preparation for the implementation of risk-based solvency regulations in Russia.

Nonetheless, the group’s asset base remains exposed to high financial system risk in Russia, which is an offsetting rating factor. The balance sheet strength assessment considers positively Ingosstrakh’s prudent reserving practices, strong liquidity position, and reinsurance programme, which is placed with a panel of reinsurers of sound financial strength.

Ingosstrakh has a track record of strong operating performance, as demonstrated by a five-year (2016-2020) weighted average return on equity of 16.4% and a combined ratio of 90.9%, as calculated by AM Best. In 2020, technical profitability improved, as evidenced by a non-life combined ratio of 93.6% (2019: 97.9%), driven by a lower loss ratio in the motor lines of business amid the COVID-19 pandemic-related restrictions. AM Best expects Ingosstrakh’s operating performance to remain strong in the intermediate term, supported by good investment returns and the group’s efforts to maintain underwriting discipline through increased use of data analytics for risk-based pricing. However, there is the potential for the loss ratio to be affected negatively by pressure on premium rates from the intense competition amid the continuing tariff liberalisation in Ingosstrakh’s core motor third-party liability segment.

Ingosstrakh is one of the leading insurance groups in Russia, with a strong competitive position and an expanding distribution network, particularly in the motor and corporate property insurance segments. Its strategy is to focus on investment into data analytics and improve the provided online services to support profitable business growth amid high competition and regulatory changes in its domestic market.

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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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