The assigned Ba3 rating reflects Baseline Credit Assessment (BCA) of b1, a moderate likelihood of support from the Armenian government (Ba3, stable outlook), which leads to a step above BCA, according to Moody's.
The stable outlook is in line with that of Armenia's sovereign rating (Ba3). It also reflects Moody's expectation that the EIAA will maintain its current financial performance over the next 12-18 months.
BCA at b1 rates the benefit of EIAA's robust capital adequacy relative to the net total exposure to 90% of insurance risk reinsured by Swiss Reinsurance Company Ltd (Swiss Re, Aa3, stable outlook), as well as reasonable financial flexibility and low financial leverage. At the same time, these strengths are constrained by EIAA's modest global size, low detail of its insurance portfolio and limited geographic diversification, investments in high-risk assets in Armenia, and weak underwriting margins.
EIAA provides export and pre-export credit insurance against political and commercial risks. Its share in total GWP of the credit insurance segment in Armenia (including insurance of loans and other financial losses) amounted to about 50% in the third quarter of 2021.
As of September 30, 2021, the company's assets amounted to AMD 3.1 billion (~EUR 5.57 million*). EIAA's equity capital amounted to AMD 2.5 billion, GWP for 9 months of 2021 exceeded AMD 247.1 million.
*1 EUR = 556.73 AMD (September 30th, 2021)