AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of INSURANCE COMPANY OF GAZ INDUSTRY SOGAZ
These rating actions follow the close of SOGAZ’s transaction with the
The ratings reflect SOGAZ’s balance sheet strength, which AM Best categorises as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
SOGAZ is a market-leading insurance group in
SOGAZ’s balance sheet strength is underpinned by post-acquisition risk-adjusted capitalisation that is categorised as strongest, as measured by Best’s Capital Adequacy Ratio (BCAR), at year-end 2018. The acquisition led to a reduction in risk-adjusted capitalisation and an erosion of the significant capital buffer that was available previously to absorb the group’s elevated exposure to political and financial system risk, due to its concentration to the Russian state and state-owned enterprises. AM Best expects a gradual recovery of the buffer over the next few years, driven by strong earnings and an adequate level of profit retention. The group’s investment quality is a constraining rating factor, as approximately 40% of the fixed income portfolio was sub-investment grade at year-end 2018.
SOGAZ group has a track record of strong profitability, reflected in a five-year weighted average return on capital of 30%, underpinned by strong underwriting margins. AM Best expects the company’s prospective performance to remain strong, although it is likely to be dampened by integration costs over the near term.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Source: AM Best
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