LONDON--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to GIC Perestrakhovanie LLC (Russia) (GIC Perestrakhovanie). The outlook assigned to these Credit Ratings (ratings) is stable.
GIC Perestrakhovanie was established in 2018 as a 100% subsidiary of General Insurance Corporation of India (GIC Re), which previously operated in Russia via a representative office. GIC Perestrakhovanie commenced underwriting business in September 2020.
The ratings reflect GIC Perestrakhovanie’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management. The ratings factor in a rating lift from GIC Re, due to the implicit and explicit support that GIC Perestrakhovanie receives from the group.
GIC Re’s commitment to its subsidiary is demonstrated by the provision of an unconditional parental guarantee and a significant whole-account retrocession. In addition, GIC Perestrakhovanie benefits from sharing its parent company’s brand name and operational resources.
GIC Perestrakhovanie’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), that AM Best expects to be maintained at the strongest level through a forecast period of five years. The company’s BCAR analysis takes into account AM Best’s additional capital requirements for new company formations. The parent company, GIC Re, has injected total capital of RUB 840 million into GIC Perestrakhovanie so far, and further capital injections are expected over the next few years to support business growth and cover start-up costs. GIC Perestrakhovanie has a conservative investment strategy, although AM Best notes the company’s exposure to the high financial system risk in Russia. An offsetting factor in the balance sheet strength assessment is the company’s relatively small capital base that increases the likelihood of potential fluctuations in risk-adjusted capitalisation.
The adequate operating performance assessment considers the group’s five-year business plan and the performance track record of an existing book of business, which was managed previously by GIC Re and will be underwritten by GIC Perestrakhovanie going forward. AM Best expects GIC Perestrakhovanie to gradually grow its portfolio in Russia and regionally, although the company is likely to face strong competition from larger and more established peers.
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