BELARUS NEWS AND ANALYSIS
DATE:
20/01/2009
Fitch Assigns Belgosstrakh IFS B
Fitch Ratings-London-20 January 2009: Fitch Ratings has today assigned Belgosstrakh an Insurer Financial Strength (IFS) rating of 'B'. The Outlook is Stable. Belgosstrakh is the largest insurer by premium volume in the Republic of Belarus.
The rating reflects the significant support provided to the company by the Belarusian government, its 100% owner, the leading role performed by Belgosstrakh in the development of the Belarusian insurance sector, and the company's reasonably good underwriting performance. Fitch notes that tariffs for compulsory lines of business in Belarus are set by the state, thus limiting Belgosstrakh's ability to control the profitability of its portfolio. The agency views capitalisation as adequate for the rating level and believes there is a strong likelihood that the Belarusian government will support the company with future capital injections.
The rating takes into account Fitch's view of the financial strength of the Republic of Belarus, and will be affected by any significant changes in Fitch's view of the financial condition of the republic. The rating also reflects the relatively high credit risk associated with the high concentration of Belgosstrakh's investments in state-owned enterprises.
Belgosstrakh recorded net premium income of BYR401bn in the first nine months of 2008, of which over 75% related to compulsory lines of business. The company has exclusive rights to provide five of the nine designated compulsory insurance lines in Belarus. At end-Q308, Belgosstrakh had a 61% share of the Belarusian non-life insurance market and represented 29% of the sector's net assets. The company occupies a market-leading position in almost every line of business in which it operates.
Fitch notes that Belgosstrakh is tasked with the provision of practical and methodological support for the evolution of the insurance industry in Belarus. This role gives the company significant influence in the determination of insurance tariffs and in the development of insurance legislation, particularly in the field of compulsory insurance. The agency therefore views Belgosstrakh to be a key component of the Belarusian government's strategy to grow the insurance sector in the republic.
Belgosstrakh was founded in 1921 and became the state insurance company following the independence of Belarus in 1991. The company has two subsidiaries: Stravita, a life insurer, and Poligraf, which carries out polygraphic and publishing activity. At end-Q308 Belgosstrakh had BYR100bn in net assets and seven branches covering all Belarusian regional centres, including Minsk.
Contacts: David Stephenson, London, Tel: +44 207 682 7471; Lyuba Tarnopolsky, +44 207 862 4147.
Media Relations: Julian Dennison, London, Tel: +44 020 7682 7480, Email: julian.dennison@fitchratings.com.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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