S&P Global Ratings believes that despite the economic and financial fallout from the pandemic and decreased oil prices, Russian insurers will remain resilient to the consequences, the agency said in its press-release.

"Russian insurers are in good shape to face these challenging times. Most rated insurers had accumulated significant capital cushions before the pandemic, and their investment portfolios include a low percentage of equities and are generally very liquid", the agency explained.

S&P noted that "Russian insurers' property/casualty insurance gross premium written will decline in 2020. Their combined (profit and loss) ratios will likely worsen to around 100%, from our previous expectation of 95%-98%, and return on equity (ROE) to about 10%, from our previous expectation of 15%". According to S&P, competition among the local insurance companies in 2020 will intensify in corporate insurance and motor insurance, and the combined loss ratios will be primarily affected by loss-making MTPL and Motor Hull segments.

The agency underlined that Russian insurers have managed to build their capital over the past five years, which will support them during this difficult period. At that "a direct hit on investment performance via mark-to-market adjustments on bond and equity portfolios will be manageable", S&P said. According to the agency's estimates, "thanks to the share of Russian insurers' investments in equities being less than 4% of invested assets, the equity markets' tumble will not immediately affect insurers' results".

Source: S&P Global Ratings