Russian National Reinsurance Company has published its Analytical Report “Reinsurance in Russia: 2017 Performance.”
The Report is based on the public statistics of the Bank of Russia and provides a fair view of the market development dynamics.
In 2017, the downward trend of the inward reinsurance market continued. However, at the end of the year, the market decline was just 2.6%, and if not for RNRC, it would have reached 24%.
The structure of premiums has changed, too. The Russian inward reinsurance market has grown by 13.6%. If not for RNRC, the market would have seen a 26% drop in premiums. The decrease in international risk premiums of Russian companies was 21% of that recorded in 2016. In 2017, the share of international business in total premiums was notably less than in 2016: 38% vs. 47%.
For the first time, RNRC has taken the first position among the leaders in terms of written premiums (RUB 7.7 billion). RNRC accounts for about 35% of the Russian inward reinsurance market. If not for written premiums of RNRC, this market would have seen a 26% drop instead of growing by 13.6%.
The trend towards the concentration of the inward reinsurance market continues.
Following a decrease in premiums from international markets, the share of Russian companies among the top 10 players is growing. In 2017, the Top 3 companies accounted for more than half of the market.
The outward reinsurance market declined by 17%. Premiums ceded to international markets continued to go down and by the end of the year, decreased by 22%. On the contrary, the Russian market grew by 12%, but only due to RNRC, which has transferred some premiums from the international to the Russian market. If not for RNRC, premiums ceded in Russia would have dropped by 27%. Overall, the share of international business in the total ceded premiums decreased from 85% in 2016 to 80% in 2017. Ceded premiums totaled RUB 110 billion.
The last years were very unsuccessful for reinsurers. 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. However, this figure was exceeded in 2017 after the final settlement of loss in respect of Berezovskaya GRES, which amounted to about RUB 26 billion, of which about RUB 20 billion were paid in 2017.
Despite the fact that the last years were very unsuccessful for reinsurers, due to a number of large paid claims, the reinsurance market remains generally attractive thanks to a significant positive balance between premiums and paid claims.
A major portion of the positive balance between premiums and paid claims goes to the international market. A considerable decrease in the positive balance in 2017 was due to both large paid claims and a decrease in ceded premiums, partly due to the transfer of some premiums from international markets to Russia in connection with the establishment of RNRC.
No significant growth of premiums is expected in 2018. The dynamics will largely depend on the ruble exchange rate. In addition, premiums under property developers liability reinsurances are expected to decrease and the general trend towards market consolidation and increase in retentions will continue, also resulting in negative effects on the amount of outward reinsurance.
Read the full text of the Analytical Report “Reinsurance in Russia: 2017 Performance”
Russian National Reinsurance Company Joint-Stock Company was established pursuant to Federal Law No. 363-FZ dated July 3, 2016 “On Amending the Law of the Russian Federation ‘On Organization of Insurance Business in the Russian Federation’" by decision of the Board of Directors of its sole founding member, the Central Bank of Russia, who owns 100 percent of the company stock. The Company’s paid-up authorized capital is RUR 21.3 billion. Reinsurance License PS No. 4351 dated October 12, 2016. ACRA rating: ААА (RU), Stable outlook. Fitch rating: BBB- (positive). In 2017, RNRC posted RUR 7.6 billion in premiums.