A new note from Moody’s says that international insurers have little exposure from the fallout over Russia’s invasion of Ukraine, but specialty lines could be impacted.
While insurance penetration is low in Russia and Ukraine, write Moody’s, with the local markets dominated by local players, it will be specialist lines that may suffer ‘moderate’ losses.
Moody’s wrote: “Several international insurers have direct exposure to Ukraine and Russia, but they are small relative to the size of the insurer’s global operations. For example, Assicurazioni Generali S.p.A (Generali, Baa2 senior, stable) owns a 38.5% stake in the fourth largest insurer in Russia, Ingosstrakh; however, the exposure represents a small share of Generali’s premiums and profits. Generali recently announced that the company will resign from positions held on the board of Ingostrakh, and the company is winding down its Europ Assistance business in Russia.”
It added: “As of June 30, 2021, AXA (A2 senior, review for upgrade) owned a 38.4% stake in RESO, the fifth largest insurer in Russia, which is small relative to the group. The two leading Austrian insurance groups, Uniqa and Vienna Insurance Group, which are unrated by Moody’s, have sizable exposure in the larger Central Eastern Europe region, amounting to 38% and 53% of total premium volumes, respectively. However, their operations in Russia and Ukraine are relatively small at 3% of premiums for Uniqa and 2% of premiums for Vienna Insurance Group.”
Insurer losses, wrote the agency, could also be mitigated by the presence of war exclusion clauses in contracts. Moody’s did say that political and sovereign risk insurance, along with trade insurance could see moderate losses.
Moody’s wrote: “Political/sovereign risk insurance covers overseas assets against expropriation, political violence including war and terrorism, currency inconvertibility, contract frustration due to political events, border closures, nonpayment by foreign governments on cross-border loans or contracts, among other coverages, depending on the specifics of the policy. Political risk policies tend to be multiyear policies with noncancelable limits and worldwide coverage.”
It added: “Trade credit insurance (TCI) covers businesses for their commercial customers’ ability to pay for international shipments – insurers incur a claims liability on unpaid invoices under certain conditions. Trade credit insurers generally have only moderate exposure to Central and Eastern Europe, which will limit their direct exposure to the military conflict, while war exclusions in some policies could further limit the exposure.”