Russian National Reinsurance Company
6 Gasheka Street, Moscow 125047
Floor 5, Ducat Place III Business Centre
+7 495 730 44 80, +7 495 730 44 79 (fax) rnrc@rnrc.ru
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RNRC publishes its Analytical Report “Reinsurance in Russia” according to the results of the 1st half of 2017

06.09.2017

       Russian National Reinsurance Company has published its traditional Analytical Report “Reinsurance in Russia”. The Report is based on the insurance market statistics for January – June 2017 published by the Bank of Russia. This period covers the first six months of the operation of the Mandatory Cession Law, for which purpose RNRC was established a year ago. The data are presented compared to the 1st half of 2016 when RNRC did not exist to see the effect of the national reinsurer establishment on the market development.

       The purpose of the Report is to provide a fair view of changes on the Russian reinsurance market.

       Inward reinsurance

       In Q2 2017, the decline of the inward reinsurance market slowed down almost twofold. The market decreased by 15.7% in Q1 and only by 7% in Q2. At the end of the 1st half of the year, the market decline totaled 11.9%. “If not for RNRC, the decrease would have reached 25% in the first six months”, thinks Nikolay Kuznetsov, Chief Actuary at RNRC.

       At the end of the first six months, the drop in the amount of international risk premiums of Russian companies remained at the level of Q1 (33%). As a result, the share of inward international business decreased from 46% to 35% of the total premiums compared to the first six months of 2016.

       On the contrary, the Russian inward reinsurance market has grown by 7%. “If not for RNRC, the market would have seen a 20% drop in premiums, as some companies have left the market and others have become less active”, says Nikolay Kuznetsov.

       RNRC has increased its share in the total reinsurance premiums from 12.9% to 16.6%. The Company has maintained its third position among the leaders after SOGAZ and INGOSSTRAKH taken in Q1. At the same time, RNRC accounts for 25% of the Russian inward reinsurance market. In general, the inward reinsurance market concentration trend continues. Following a decrease in premiums from international markets, the share of Russian companies among the top 10 players is growing.

       Premiums ceded to Russian insurers by foreign reinsurance companies have dropped from RUB 9.6 billion to RUB 6.4 billion. This was mainly due to the strengthening of the ruble and decrease of premiums in the Ruble equivalent.

       International business of RNRC has not reached any significant volume yet, as its operations on international markets started as late as Q2 2017 upon international rating assignment by Fitch (BBB-).

       Outward reinsurance

       The fall in premiums that Russian insurers are willing to pay for their reinsurance coverage has slowed down. While at the end of Q1 2017 the market decrease reached 20%, the aggregate drop for six months was just 10%. The fall was due to a 14% decrease in premiums ceded to international markets in the first six months (in Q1 2017, the decrease in premiums ceded to international reinsurers reached 25%).

       “There is a trend towards an increase in the treaty capacity, as well as a growing number of co-insurance contracts leading to a decrease in outward reinsurance premiums”, says Nikolay Kuznetsov. “In addition, the strengthening of the ruble and changes in the premiums accounting procedure continue to affect the year-to-year comparability of figures. Ruble strengthening causes a reduction in the amount of premiums denominated in foreign currencies and the new accounting regulations increase the amount of premiums, as they require that premiums be reported before the formally executed documents are received.”

       RNRC's share in the total outward reinsurance premiums has slightly increased to reach 4.9% at the end of the first six months (Q1: 4.2%).

       Paid claims

       In the 1st half of 2017, the amount of paid claims increased by 25% compared to the similar period of 2016. Such an unusually high share of reinsurers in the paid claims in the 1st half of 2016, was due to the loss claimed under Achinsk Refinery reinsurance (the loss of SOGAZ). However, this figure was exceeded in 2017 after the final settlement of loss in respect of Berezovskaya GRES (the loss of CHUBB), which amounted to about RUB 26 billion, of which about RUB 20 billion were paid in 2017.

       Despite the fact that the last two years were very unsuccessful for reinsurers due to a number of large claims, the reinsurance market remains generally attractive according to a significant positive balance between premiums and paid claims.

       The reports for 2016 and Q1 2017 are available for review on RNRC's website at www.rnrc.ru.


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      Russian National Reinsurance Company Joint-Stock Company was incorporated by virtue of Federal Law no.363-FZ “On amendment of the RF Law “On Insurance Business in the Russian Federation”, by Resolution of the Board of Directors of its sole shareholder, the Central Bank of Russia, which owns 100% of Company shares. Paid-up capital of the Company is 21.3 billion roubles. Reinsurance license ПС no. 4351 dd. 12.10.2016. ACRA Rating is AAA (RU), stable outlook. Fitch rating is BBB- (stable).