RUSSIA: RAEX national rating agency confirmed rating of ERGO at ruAA+, stable forecast
The main business of ERGO is moto insurance (Motro Hull and MTPL). The insurer demonstrates high growth rate of equity (+22.7% for the period from 31.03.2017 to 31.03.2018). But at that the growth rate of premiums is rather low: in 2017 only 5% growth compared to 2016. Besides the insurer has low portfolio diversification with moto insurance prevailing (in 2017 Motor Hull share in premiums amounted to 60.4%, and moto insurance in total generated 84.3% of the company's GWP). However, the rating action was positively affected by the insurer's Motor Hull low loss ratio (45.4% in 2017).
The rating was positively affected also by the insurer's high diversification of the clients' base (in 2017 the share of 5 biggest clients amounted to 3.6% of premiums); low level of terminated agreements (1.2% in 2017) and high diversification of sales channels (in 2017 the share of individual agents amounted to 38.9%). The key factor with positive influence on the rating, pointed out by RAEX, was high potential of the company's shareholder, ERGO International Aktiengesellschaft, a member of MUNICH Re Group.