A.M. Best Affirms Ratings of B&B Insurance Co., OJSI

OLDWICK, N.J., Mar 25, 2009 (BUSINESS WIRE) -- A.M. Best Co. has affirmed the financial strength rating of C++ (Marginal) and the issuer credit rating (ICR) of "b+" of B&B Insurance Co., OJSI (B&B) (Belarus). The outlook for both ratings is stable.

The ratings reflect the company's weak although improving risk-adjusted capitalisation, despite limited financial flexibility and moderate financial performance with volatile underwriting performance.

A.M. Best believes that B&B's weak risk-adjusted capitalisation is improving mainly due to substantial unrealised capital gains on real estate. A.M. Best believes that the improving capital position is supportive of projected growth of around 10%-15% per annum in 2009 and 2010. The prospective risk-adjusted capitalisation remains strained due to limited financial flexibility and high dividend payments (around 20% of retained profit). In addition, A.M. Best is of the opinion that despite the increased level of protection due to a newly adopted reinsurance programme, the capital might be negatively impacted in the event of a major catastrophic event. There are also increased levels of credit risk, as from 2008 all outward reinsurance is transacted through a non-rated Belarusian National Reinsurance Organisation.

B&B's overall operating performance has been consistently positive; however, it is heavily dependent on investment income results, which mainly derive from rental and interest income. Once the final 2008 results under International Financial Reporting Standards are published, the company's technical results are likely to be negative, despite its moderate underwriting performance, with a combined ratio of below 95% and loss ratio of 69%. A.M. Best believes that the company's underwriting performance will remain at a moderate level; however, the loss ratio is likely to be volatile as a result of its decision to increase the retention level from USD 1 million to USD 1.5 million, as well as the share of accepted inward reinsurance.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit

The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit

SOURCE: A.M. Best Co.

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