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S&P Global Ratings takes negative action on rated Russian insurers

2nd March 2022 - Author: Pete Carvill

S&P Global Ratings has taken what it calls ‘negative rating actions’ on its rated Russian insurers.

S&P Global RatingsThe agency said that its actions reflected its view about increased geopolitical and economic risks in Russia.

According to S&P, it has:

  • Lowered the ratings on Sogaz Insurance and Ingosstrakh Insurance to BBB-.
  • Lowered the ratings on Sberbank Insurance to BB+ from BBB-.
  • Placed the ratings on VSK Insurance JSC, Energogarant PJSIC, Lexgarant Insurance Co., Alfastrakhovanie OAO, Insurance Co. RESO-GARANTIA, and its nonoperating holding company (NOHC), Stanpeak, on CreditWatch negative.

In a statement, S&P said: “We consider that the escalation of Russia-Ukraine tensions, the military operations in Ukraine, and the widening of sanctions against Russia could lead to conditions that eventually destabilize Russia’s economy and financial system.”

It added: “We consider that the impact of recent sanctions and possible additional ones could further intensify the volatility in the domestic market and local currency, which in turn could erode insurers’ profitability and capital positions.”

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Russia’s invasion of Ukraine has so far been catastrophic for the former’s economy, with its currency currently tanking around the world. Yesterday, AM Best said that it was likely to have a ‘significant fallout’ in the capital markets, which would impact on the entire insurance industry in the short-to-medium term.

Meanwhile, analysts have predicted that insurers will face exposure to Russia’s invasion in a number of areas. Peel Hunt said a few days ago that the market is exposed in a number of areas, including political risk insurance (PRI), aviation war, trade credit, and marine cargo/war.

 

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