The credit rating of Limited liability company RNCB Insurance (hereinafter, the Company) is based on the very high likelihood of extraordinary support, if needed, to the Company from the parent entity with high creditworthiness. The Company's standalone creditworthiness assessment (SCA) is based on moderately strong business profile, medium financial profile, and adequate corporate governance quality.
The Company is part of a banking group headed by a major Russian bank (hereinafter, the Supporting Entity, or the SE). The Company was established in early 2021. Currently, it offers a range of insurance products including accident insurance, property insurance for individuals and corporates, and medical insurance.
key assessment factors
Very high likelihood of extraordinary support from the Supporting Entity. In ACRA’s opinion, the Supporting Entity will provide the Company with sufficient long-term and short-term financing and capital injections, if needed. This opinion is based on the following:
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The insurance market is important for the SE since its growth potential is high;
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There is a deep operational integration between the Company and the SE (the Company's standards of management, strategic planning and internal control are established in line with the Supporting Entity's approaches);
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Potential default of the Company may pose substantial operational and financial risks for the SE;
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The Company has been funded by the SE to develop its business, and the SE would also provide additional support in the form of liquidity or capital, if needed.
Moderately strong business profile. In the first nine months of 2022, the Company's market share was insignificant. The main competitive advantage is partnership with the Supporting Entity.
The diversification of the Company's customer base is limited due to the high concentration of customers in certain regions. Sales channels are strongly concentrated: about 95% of premiums come through the SE's offices. At the same time, ACRA considers this channel to be quite stable, since the Supporting Entity, being the owner of the Company, is unlikely to dissolve this partnership.
The range of products offered to customers is limited, with the major share occupied by insurance services related to lending and banking services. The Company does not operate in the motor insurance segment and offers limited coverage of medical risks.
A strength of the Company's business is high operational efficiency. The combined loss ratio is expected to be about 0.9 by the end of 2022. At the same time, the Agency believes that in the medium term the Company is able to maintain business efficiency at a high level. In addition, the growth rate of the Company's insurance premium is expected to be higher than the market average. The Company plans to expand its product range and channels for promoting its services. The presence of a strong partner (the Supporting Entity) will also contribute to the growth.
The medium assessment of the financial profile is determined by capital adequacy metrics and asset quality. The liquidity assessment is at a higher level and does not affect the financial profile.
The ratio of available capital to capital at risk, estimated in line with ACRA's methodology, is below medium. Given the Company's access to capital sources, the capital adequacy assessment is medium.
The Company follows a conservative investment policy established by its management bodies and invests in assets of high credit quality: bonds of the Ministry of Finance of the Russian Federation and the obligations of the Supporting Entity. Significant pressure on the asset quality assessment is exerted by high asset concentration. As of September 30, 2022, investments in the SE's obligations accounted for 57% of assets, or 78% of equity.
Strong liquidity is based on high scores for liquidity ratios: as of September 30, 2022, the Company's short-term and long-term liquidity ratios were much higher than the relevant thresholds.
The quality of corporate governance is assessed as adequate, since ACRA positively assesses management's experience and corporate governance practices of the Company.
key assumptions
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Maintaining the SE's shareholder and operational control over the Company.
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Maintaining the Company's strategy in the Russian insurance market.
potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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Growth of the Supporting Entity's creditworthiness;
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Significant increase in the Company's SCA.
A negative rating action may be prompted by:
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Loss of shareholder or operational control by the SE, and lower propensity of the SE to support the Company.
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Decline in the Supporting Entity's creditworthiness.
rating components
SCA: a-.
Support: SCA plus one notch.
issue ratings
There are no outstanding issues.
regulatory disclosure
The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Insurance Organizations on the National Scale for the Russian Federation, the Methodology for Analyzing Rated Entities Associated with a State or a Group, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
A credit rating has been assigned to Limited liability company RNCB Insurance for the first time. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by Limited liability company RNCB Insurance, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the ISAP financial statements of Limited liability company RNCB Insurance. The credit rating is solicited, and Limited liability company RNCB Insurance participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to Limited liability company RNCB Insurance. No conflicts of interest were discovered in the course of credit rating assignment.
