The rating actions follow S&P's upgrade of Russia on February 23 and similar rating actions on Russian banks and corporate entities.
S&P revised its outlook on SOGAZ to positive to reflect its improving average credit quality, which is gradually moving closer to investment-grade level, alongside continued sound underwriting performance and sustainable capitalization. SOGAZ continues to outperform the market with a net combined (loss and expense) ratio below 85% in 2017 and return on equity exceeding 26%. SOGAZ is the largest player in the Russian P/C insurance market with a 17.8% market share based on 2017 results. The majority of SOGAZ's investments are deposits with large Russian banks and bonds of large Russian corporate entities rated 'BBB-'or higher.
INGOSSTRAKH's outlook was revised to positive to reflect the company's improving average credit quality, which is gradually moving closer to investment-grade level, and very strong capital and earnings supported by sound underwriting performance. INGOSSTRAKH continued to show sustainable operating performance in 2017.
The outlook of RESO-Garantia was revised to positive to reflect the company's improving average credit quality. The company's investment portfolio is well diversified among international and Russian entities rated 'BBB-'and higher. About 67% of RESO-Garantia's invested assets in bonds, cash and deposits relate to domestic and international entities with average credit quality 'BBB-' and above, which compares positively with those of local peers.
S&P consider that the operating environment for Russian insurers will remain challenging this year mainly due to still-high country risks and uncertainties in performance of MTPL business. The same time they project that the Russian P/C insurance sector will be profitable overall in 2018 mostly thanks to corporate lines. S&P points out that the quality of the largest insurers' investment portfolios is improving.
A comprehensive analysis of the Russian insurance market's performance in 1H2017 will be available in the forthcoming issue of the specialized publication "INSURANCE Profile Russia FY2017", will be officially launched on April 10th.
The biannual bilingual publication (Russian and English) includes the FY2017 financial results of the insurance market, from GWP and mediated premiums to claims paid, but also aspects such as reinsurance statistical data, the insurance companies' GWP portfolios etc., as well as the status of the Russian reinsurance market and perspectives of reinsurance market alongside of the new partner - RNRC: statistical data and market opinions.
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