Best’s News & Research Service - August 27, 2021 09:45 AM (EDT)
AM Best Revises Issuer Credit Rating Outlook to Positive for INSURANCE COMPANY OF GAZ INDUSTRY SOGAZ
- August 27, 2021 09:45 AM (EDT)
London //BestWire// - AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” (Good) of INSURANCE COMPANY OF GAZ INDUSTRY SOGAZ (SOGAZ) (Russia). The outlook of the FSR is stable.
These Credit Ratings (ratings) reflect SOGAZ’s consolidated 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 positive outlook on the Long-Term ICR reflects the improvement in SOGAZ’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), following the successful integration of VTB Insurance, Limited (VTB Insurance, Ltd). AM Best expects SOGAZ’s risk-adjusted capitalisation to be maintained at the strongest level supported by strong profitability and moderate dividend payments.
SOGAZ’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation at the strongest level, as measured by BCAR. The group’s risk-adjusted capitalisation declined in 2018, following SOGAZ’s acquisition of VTB Insurance, Ltd. However, as anticipated, the capital buffer recovered at year-end 2019 and improved further in 2020, due to strong earnings generation and an adequate level of profit retention. Moreover, SOGAZ’s balance sheet strength is supported by its robust liquidity, a comprehensive reinsurance programme and adequate reserving. A partially offsetting rating factor is the concentration of most of the group’s operations and assets in Russia, which exposes SOGAZ to high levels of economic and financial system risk.
SOGAZ has a track record of strong performance reflected in a five-year (2016-2020) weighted average return-on-equity ratio of 28.7% and a combined ratio of 85.5%, as calculated by AM Best. AM Best expects SOGAZ’s prospective performance to remain strong, given its performance record and the excellent underwriting results of the former VTB Insurance, Ltd book.
SOGAZ is the 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, Ltd has improved the group’s market position, product diversification and distribution, particularly in the personal lines segment. SOGAZ’s gross written premiums of RUB 387 billion (approximately USD 5.1 billion) in 2020 comprise a 24% 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 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.