RUSSIA: RAEX improved rating of YUGORIA insurer to ru-

19 September 2018 — Marina MAGNAVAL
The National rating agency RAEX improved rating of YUGORIA to ruA- with positive forecast. Before the insurer's rating level was ruBB+ with stable forecast, as ASN announced.

Rating action is based on the improvement of a range of the company's financial parameters. The insurer's equity exceeded its charter capital, debt burden decreased, and the agency demonstrated significant growth of return on business ratio (in 2017, return on sales amounted to 9%, in 1H 2018 it reached 21.1%; return on equity amounted to 17.4% in 2017 and in 1H 2018 it reached 58.4%).

YUGORIA is an all-lines insurer, but its main activities are MTPL and Motor Hull (86% of all the company's premiums in 1H 2018). The company has a high size indicator (2nd class) based on the agency's classification and has maintained its 25th place in the market ranking in terms of GWP for the 1H 2018.

Positive influence on the rating comes from rather low loss ratio of the main insurance types in 1H 2018 (MTPL- 49.3%, Motor Hull - 38.2%), a high level of geographical diversification in its portfolio (the biggest region accounts for 23% of premiums). However, diversification of the company's insurance portfolio is rather low (MTPL in 1H 2018 generated 52.7% of premiums). Loss ratio in general is rather low based on the first half year result (38.5%) as well as the combined ratio (80.4%). The agency has positive estimates for company asset quality and reliability of reinsurance coverage.

Among negative rating factors are absence of big paid claims during the last five years and low level of risk-management, low diversification of sales distribution channels (in 1H 2018 the biggest sales channel, individuals, generated 58.7% of premiums). According to RAEX (Expert RA), as of June 30, 2018, the insurer's assets amounted to RUB 11.5 billion, equity - RUB 3.6 billion, charter capital - RUB 1.2 billion, and for the first half year the company's GWP amounted to RUB 4.4 billion, said ASN.

*EUR 1 = RUB 72.9921 (as of 30.06.2018)

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