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FOR IMMEDIATE RELEASE
LONDON - AUGUST 07, 2020 09:26 AM (EDT)
AM 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 AM Best categorises as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Ingosstrakh’s balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation 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 requirements for the strongest BCAR assessment over the medium term, supported by strong internal capital generation. Ingosstrakh has taken steps to improve the credit quality of its investment portfolio over the past two 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 also is negatively affected by the risk that the group’s banking subsidiary, Bank Soyuz JSC, may require further capital injections due to its vulnerable (although improving) credit profile.
Ingosstrakh reported strong operating results over the period of 2015-2019, with a five-year weighted average return on equity of 16.6% and a combined ratio of 89.8%, as calculated by AM Best. In 2019, technical profitability weakened, demonstrated by a non-life combined ratio of 97.9% (2018: 89.7%), largely due to increased competition in Ingosstrakh’s core motor third-party liability (MTPL) segment where rates were liberalised partially by the regulator early in the year. AM Best expects the company’s operating performance to remain strong in the intermediate term, supported by good investment returns and the group’s efforts to improve MTPL performance through the application of flexible tariffication and the increased use of risk-based pricing. At the same time, there is a potential for the motor loss ratio to be affected negatively by the recent depreciation of the Russian rouble, which has increased the cost of motor spare parts.
Ingosstrakh is one of the leading insurance groups in Russia, with a strong competitive position and a wide distribution network, particularly in the motor and corporate property insurance segments. Its strategy is to focus on investment into data analytics and online services to support profitable business growth amid high competition and regulatory changes in its domestic market.
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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.