The credit rating of Joint-Stock Company «Sovcombank insurance» (hereinafter, Sovcombank insurance, or the Company) reflects its strong business profile and financial profile, and adequate governance quality. ACRA assesses the degree of support for the Company from its shareholder with a high creditworthiness (hereinafter, the parent company, the Supporting Entity, or the SE) as very high.
Sovcombank insurance is a universal insurance company that has been operating in the Russian insurance market since 1993. In 2023, the Company became the head entity of an insurance group that unites several entities controlled by a parent company. As of December 31, 2024, the group included the Company, a life insurance company, and a private pension fund. Sovcombank insurance is actively expanding its business through acquisition of other insurers and the organic growth. The Company has significantly increased its shares in its key segments of the insurance market, including motor hull insurance, accident insurance, and life insurance. By the end of 2024, the Company, including a subsidiary, was ninth among insurance groups in terms of total earned premiums and fifth in life insurance.
KEY ASSESSMENT FACTORS
The Company’s strong business profile reflects its sustainable market standing and high operating performance demonstrated in 2024, as well as strong metrics expected in the medium term.
ACRA has maintained the high score for the product range quality. Today, the Company is present in all significant segments of the Russian insurance market. By the end of 2024, life insurance generated 73% of insurance premiums (vs. 60% a year earlier), hull insurance — 9%, accident insurance — 10%. Significant increase in the share of life insurance in the Company’s portfolio was driven by the surge of this segment in the Russian market in 2024. At the same, the regional concentration of the Company’s client base has also grown since the main volume of premiums in life insurance is generated in Moscow. The share of bank sales channel almost reached 70% in2024 vs. 60% in 2023, while the share of direct sales fell to 17% vs. 25% a year earlier. Growing concentration puts some pressure on the assessment of the Company’s market standing, although it does not affect the business profile in general on the back of the strong operational performance.
According to the Company’s IFRS financial statements for 2024, the growth rate of its insurance premiums exceeded 350% due to, among other things, the influence of indicators of acquired companies. ACRA expects that in the medium term, the total growth rate will not be lower than the market average. In 2024, the combined loss ratio (CLR) amounted to 81%, which is assessed by the Agency as high. The return on life insurance assets is also high and amounts, according to ACRA’s estimates, to about 17%. According to the Company’s projections for the upcoming years, the operating efficiency of insurance business will remain high.
The strong financial profile stems from the Company’s high capital adequacy metrics, high asset quality, and strong liquidity. By December 31, 2024, the ratio of available capital to capital at risk, calculated as per ACRA’s methodology, amounted to 2.0, which is an indication of the high capital adequacy assessment. The Company and its subsidiaries have a significant buffer of equity per regulatory standards.
The average asset quality is still high as the Company invests primarily in low-risk assets. At the same time, the Agency notes that the asset concentration is still elevated: as of December 31, 2024, the ten largest groups of counterparties accounted for 52% of the total assets calculated in line with the Bank of Russia’s requirements to the financial sustainability and solvency of insurers.
The Company’s strong liquidity position is based on current and long-term liquidity ratios — 2.21 and 1.36, respectively. The current liquidity ratio is high because the effective periods of most of life insurance contracts far exceed one year.
The management quality is assessed as adequate given the positive assessments of the strategic vision and management, as well as corporate governance.
ACRA assesses the degree of support from the Supporting Entity as very high. This conclusion is based on the following:
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Legal ties with the SE, the SE has full strategic and operational control over the Company, the SE’s representatives are included in the Company’s board of directors;
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Significance of the financial result generated by the insurance business in the SE’s total profits;
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The Company’s authorized capital was replenished by the Supporting Entity;
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The development of the Company and the insurance business in general is part of the SE’s strategy;
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The Company operates under a similar brand, therefore, in ACRA’s opinion, the Company’s default would be associated with the SE and would pose sound reputational risks to the SE.
Given that the SE’s creditworthiness assessment (SECA) is not higher than the Company’s SCA, the support factor does not affect the final credit rating of the Company.
KEY ASSUMPTIONS
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The Company implementing its business plans in the next 12–18 months in accordance with the management’s projections.
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The Company maintaining its capital and asset management and underwriting policies.
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:
- Lower asset concentration along with sustainably high asset quality and sufficiently high capital to asset ratio.
A negative rating action may be prompted by:
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Significantly weaker operational performance;
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Decrease in the ratio of available capital to capital at risk;
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Increase in the asset concentration, including higher investments in assets of associated entities, and decrease in the capital to assets ratio;
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Worse current liquidity ratio.
RATING COMPONENTS
SCA: аa.
Adjustments: none.
Support: ACRA is of the opinion that the Supporting Entity will be able to provide the Company, if necessary, with extraordinary support in the form of capital and/or liquidity. However, since the SECA is not higher than the Company’s SCA, the support factor does not affect the Company’s credit rating, which is set at AA(RU).
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, Methodology for Assigning Credit Ratings with External Support, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of Joint-Stock Company «Sovcombank insurance» was published by ACRA on May 12, 2020 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 is based on the data provided by Joint-Stock Company «Sovcombank insurance», information from publicly available sources, and ACRA’s own databases. The rating analysis was conducted using the ISAS and IFRS financial statements of Joint-Stock Company «Sovcombank insurance». The credit rating is solicited, and Joint-Stock Company «Sovcombank 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 additional services to Joint-Stock Company «Sovcombank insurance». No conflicts of interest were identified in the course of credit rating assignment.
