Long-term counterparty credit ratings on SOGAZ and Insurance Co. TRANSNEFT were lowered to 'BB+' from 'BBB-', while rating on the agency's Russia national scale changed to 'ruAA+' from 'ruAAA'. The outlook is stable. All ratings were removed from CreditWatch negative where they were placed on Dec. 29, 2014.
Long-term counterparty credit ratings on INGOSSTRAKH Insurance Co. was lowered to 'BB+' from 'BBB-' (on Russia national scale ratings to 'ruAA+' from 'ruAAA'). At the same time, the ratings were removed from CreditWatch negative where placed on Dec. 29, 2014. The outlook is negative.
OSAO RESO GARANTIA's long-term counterparty credit rating was lowered to 'BB' from 'BB+' (on Russia national scale rating to 'ruAA' from 'ruAA+'). The ratings were removed from CreditWatch negative where the agency placed them on Dec. 29, 2014. The outlook is stable.
The action reflect the agency's view that "economic prospects in Russia are likely to remain significantly weaker over the next couple of years than we had previously anticipated." S&P's considers that the impact of the ongoing deterioration of the economic environment will be more severe than anticipated before.
"Historically, Russia's insurance market has been volatile and very dependent on economic factors. Consequently, we expect insurance sector growth to decelerate in 2015 to less than 2% in nominal terms, as measured by gross premiums written (GPW). We now believe that growth in real terms will likely be negative, considering projected inflation of 13.5%. We see accelerating inflation adding to growing losses in the insurance sector. We believe, however, that in 2016 and 2017 growth will pick up and with the expected deceleration in inflation, it will be positive in real terms," said the agency.
S&P at the same time affirmed the rating on Rosgosstrakh at BB-with negative outlook, Soglasie at BB- with stable outlook, and VTB Insurance at BB+ with negative outlook.
Long-term rating on OAO ROSGOSSTRAKH was affirmed at 'BB-' ( 'ruA+'). The outlook is negative. S&P's has revised its business risk assessment for OAO ROSGOSSTRAKH to satisfactory from strong, driven by the IICRA's revision and considering the company's competitive position as strong as it enjoys strong brand recognition, and has a superior distribution network to those of its domestic peers. However, "the company's financial risk profile is very weak. This assessment reflects capital and earnings that are less than adequate and the company's high risk position. The company's high risk position is due to significant related-party, sector, and single name concentrations."
Long-term rating on SOGLASIE was affirmed at 'BB-' ('ruAA-'). The outlook is stable. The agency continues to consider the company's competitive position as adequate. The weak financial risk profile reflects S&P's view of the company's lower adequate capital and earnings and high risk position. The capital assessment also takes into account that, in line with the agency's projections in January 2015, the shareholder provided a RUB2 billion capital injection to SOGLASIE.
S&P's has also affirmed its long-term counterparty credit ratings on VTB INSURANCE at 'BB+' ('ruAA+'). The agency has revised downward its assessment of VTB INSURANCE's stand-alone credit profile to 'bb' from 'bb+'. The change reflects the revision of the business risk profile to vulnerable from fair, driven by S&P's revised view of insurance industry and country risk. The agency considers VTB Insurance Ltd. as core to its parent, government-owned VTB Bank JSC and it added one notch of support to the rating on VTB Insurance to reflect this. The outlook on VTB Insurance is negative, mirroring that on the parent.
5282 views
