The credit rating of Republican Unitary Enterprise "Belarusian National Reinsurance Organization" (hereinafter, BNRO, or the Company) reflects the support from the Government of the Republic of Belarus (ACRA rating: B+, outlook Developing).
BNRO is a specialized reinsurance company established by Resolution of the Council of Ministers of the Republic of Belarus dated November 4, 2006 No. 1463 "On incorporation of Belarusian National Reinsurance Organization" in accordance with Decree of the President of the Republic of Belarus dated August 25, 2006 No. 530 "On insurance activities". The Company was established with the sole purpose of carrying out exclusively reinsurance business and supervising reinsurance contracts made by Belarusian insurance companies with other insurance organizations. Until 2020, Belarusian insurance companies were allowed to reinsurance their risks solely with BNRO. In 2020, reinsurance business was partially liberalized in Belarus, and insurers were allowed to reinsure their risks with other Belarusian insurance companies and, subject to certain conditions, with foreign reinsurers. At the same time, BNRO has remained in charge of supervising the terms of each reinsurance contract made by Belarusian insurers.
key assessment fACTORS
A very high assessment of the degree of support. BNRO is associated with the state: it was established by a special regulatory act, and it is owned and controlled by the state. The Company's CEO is appointed upon approval from the Council of Ministers of the Republic of Belarus. The state supports BNRO with contributions to the authorized capital at the expense of both retained earnings and the republican budget. During the period from 2006 to 2022, the Company's capital was significantly increased.
In ACRA's opinion, the Company will be provided, if necessary, with sufficient long-term and short-term funding, including capital injections, because:
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BNRO is the leading reinsurer whose importance for the Belarusian economy is significant. It is a supervisory and methodological organization for reinsurance business in the country. BNRO also acts as a priority reinsurer in all major projects implemented in Belarus;
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The state has a significant influence on the strategy and operating activities of the Company;
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The state has previously provided BNRO with capital support in the amount sufficient for the successful implementation of its development strategy.
The degree of dependence of the Company and the state on homogeneous risk factors is assessed as medium.
Taking into account the above factors, the Company's credit rating is determined on par with the long-term local currency credit rating of the Government of the Republic of Belarus.
The Company's market and financial indicators reflect the specifics of its activities. The historical growth rates of reinsurance premiums mainly correspond to the indicators of the Belarusian insurance market, with the exception of a significant decrease in the volume of premiums in 2022, which occurred following the liberalization of reinsurance activities mentioned above. In the future, BNRO is expected to maintain its market share and return to moderate business growth rates. The average value of the combined loss ratio for 2019–2022 indicates the high operational efficiency of the Company. At the same time, in some years, the combined ratio may significantly exceed one, which is typical of reinsurance companies that are the ultimate holders of significant amounts of insurance risk.
The capital adequacy and liquidity indicators estimated on the basis of the Company's IFRS reporting for 2022 are quite high. The Company's assets mainly include investments in securities of the Republic of Belarus and deposits in Belarusian state banks.
According to the Agency's approaches, the Company's standalone creditworthiness is not a factor affecting its credit rating, since the rating is assigned based on the Methodology for Analyzing of Rated Entities Associated with a State or a Group.
Key assumptions
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The state retaining its control over the Company.
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The Republic of Belarus maintaining its propensity to provide the Company with regular and extraordinary support.
POSSIBLE OUTLOOK OR RATING CHANGE FACTORS
The Developing outlook assumes a variety of trends: the rating may stay unchanged, be upgraded or downgraded.
A positive rating action may be prompted by:
- An upgrade of the long-term local currency credit rating of the Republic of Belarus.
A negative rating action may be prompted by:
- A downgrade of the long-term local currency credit rating of the Republic of Belarus.
Rating components
Standalone Creditworthiness Assessment (SCA): no.
Adjustments: no.
Support: on par with the long-term local currency credit rating of the Government of the Republic of Belarus.
Issue ratings
There are no outstanding issues.
regulatory disclosure
The credit rating has been assigned to Republican Unitary Enterprise "Belarusian National Reinsurance Organization" under the international scale based on 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.
The credit rating has been assigned to Republican Unitary Enterprise "Belarusian National Reinsurance Organization" 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 Republican Unitary Enterprise "Belarusian National Reinsurance Organization", information from publicly available sources, and ACRA’s own databases. The credit rating is solicited, and Republican Unitary Enterprise "Belarusian National Reinsurance Organization" 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 ancillary services to Republican Unitary Enterprise "Belarusian National Reinsurance Organization". No conflicts of interest were identified in the course of credit rating assignment.
