RUSSIA: Fitch Ratings affirms the financial strength rating of the Russian National Reinsurance Company (RNRC) at BBB

8 December 2021 — Marina MAGNAVAL
Fitch Ratings has affirmed the financial strength rating of the Russian National Reinsurance Company (RNRC) at BBB with a stable outlook, ASN reports.

The rating reflects the fact that the company is 100% owned by the Central Bank of the Russian Federation, as well as the systemic role of the reinsurer in the Russian insurance sector. The RNRC's rating and outlook on the rating are at the same level as the Russia's long-term issuer default rating in native currency and its outlook. They reflect strong financial support from the Central Bank of the Russian Federation and the company's preemptive right to receive 10% of most reinsurance risks in the country.

The rating agency sees the financial performance of RNRC as good, given the strong underwriting result for the period 2019 - 9 months of 2021. RNRC's net profit for 9 months of 2021 amounted to RUB 7.9 billion (EUR 93.70 million*), which is an increase compared to RUB 6.2 billion in 9 months of 2020 and RUB 7.4 billion in 2020. The combined ratio for RNRC improved to 37% in 9 months of 2021 compared to 55% in 9 months of 2020, 61% in 2020 and an average annual level of 115% in 2017-2019.

It is also noted that RNRC's investments still demonstrate some concentration in government bonds at the level of 69% of equity capital, or 56% of total investments at the end of September 2021. This is due to the internal investment requirements of the reinsurer set by the shareholder, according to Fitch Ratings.

* at the following exchange rate:

1 EUR = 84.3050 RUB (01.10.2021)

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