Fitch upgrades two Belarusian insurers

Fitch Ratings has upgraded the insurer financial strength ratings of two Belarusian state-owned insurers - Belarusian republican unitary insurance company - Belgosstrakh - and export-import insurance company of Belarus - Eximgarant - to 'B' from 'B-'. The outlook on both ratings is stable.

The upgrades and stable outlook of the state-owned insurers reflect Fitch's opinion that the ability of the Belarusian authorities to provide support to these entities has strengthened since the height of the global financial crisis.

The stronger performance of the Belarusian economy, which reported 6.6% gross domestic product growth in the nine months of 2010 compared to 0.2% in 2009, supports Fitch's view of a more stable near-term outlook for sovereign finances.

Fitch said it also considers the commitment of the local authorities to support Belgosstrakh and Eximgarant as strong, taking into account the track record of such support in the past and the relevant guarantees set in the local regulatory framework. Belgosstrakh's and Eximgarant's ratings will continue to be affected if Fitch considers there are any changes in the financial condition of the Republic of Belarus.

Fitch noted Belgosstrakh's and Eximgarant's strong coverage of the regulatory solvency ratio and views the insurers' risk-adjusted capital position as commensurate with the rating level. This is partially offset by the significant concentration of the insurers' investments in state-owned enterprises and banks, which could potentially significantly reduce capital adequacy in the event of financial instability at the sovereign level.

Belgosstrakh was founded in 1921 and is the largest insurer by premium volume in Belarus with a 56% share of the local non-life insurance sector in the first half of 2010, BYR324bn in net premiums written and BYR 1 335bn in total assets. Belgosstrakh has seven branches and 119 representative offices covering all Belarusian regional centres, including Minsk.

Eximgarant was founded in 2001 in the framework of a government programme aimed at promoting national export operations. Eximgarant was the sixth-largest insurer in Belarus by premium volume, with BYR22bn in net written premiums and BYR502bn in total assets. Eximgarant is a member of the Prague club of the International Union of Credit and Investment Insurers, which includes the largest export credit and investments insurers from developed and developing countries.


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