Fitch affirms Beleximgarant’s Financial Strength rating at “B”, Outlook “Negative”
<p> MINSK, Apr 29 - PrimePress. Fitch Ratings says it has affirmed the Insurer Financial Strength (IFS) Rating of Export-Import Insurance Company of the Republic of Belarus's (Eximgarant) at 'B'; the Outlook is Negative. </p> <p> </p> <p> “The rating and Outlook continue to reflect Eximgarant's 100% state ownership (Belarus; Local-Currency Long-Term Issuer Default Rating (IDR): B/Negative) and the insurer's systemic role as the local export credit agency, as reflected by the state guarantees for insurance liabilities under compulsory lines and export insurance. The rating also reflects Eximgarant's robust profit generation, adequate capital position, significant exposure to domestic financial risks and the weak quality of the insurer's investment portfolio.” </p> <p> </p> <p> “The Belarusian state has established strong support for Eximgarant through its legal framework to develop a well-functioning export insurance system. In February 2021, new regulation on export development was enforced, which confirmed the exclusive right of Eximgarant for state guarantees in the export insurance, but has also established incentives for a wider usage of bank and insurance instruments by Belarusian exporters. As a result, Eximgarant expects to see strong growth in the percentage of exports to be covered by insurance. Despite the potential rise of competition, Fitch believes that the new regulation will not weaken Eximgarant's business profile.” </p> <p> </p> <p> According to Fitch, Eximgarant reported a stronger net income of Br54 million ($21.1m) in 2020, compared with Br27 million in 2019. This was due to an increase in FX gains of Br32 million ($12.5m) in 2020 from FX losses of Br2 million ($780,200) in 2019. However, the underwriting result weakened, with the combined ratio at 120% in 2020 from 103% in 2019. This was due to the poor underwriting result of the financial risk and export insurance. Eximgarant had few paid and reserved claims, but their impact on its underwriting result was rather pronounced due to the high levels of net retention and a geographical concentration in export insurance. </p> <p> </p> <p> Eximgarant remains considerably exposed to domestic financial risks insurance, which accounted for 34% of its non-export portfolio per gross written premiums (GWP) in 2020. Eximgarant writes various kinds of credit default insurance for loans issued by Belarusian banks and for corporate bonds. The large exposure and the absence of local government guarantee on financial risks insurance negatively affects Eximgarant's credit profile. </p> <p> </p> <p> Beleximgarant (Belarus Eximgarant) is a state-owned company that has been operating since 2001, providing insurance coverage for export contracts of Belarusian companies and insurance coverage of export loans. The company is a member of the International Union of Credit and Investment Insurers. End </p>
2021-04-30
Primepress
Fitch affirms Beleximgarant’s Financial Strength rating at “B”, Outlook “Negative”
MINSK, Apr 29 - PrimePress. Fitch Ratings says it has affirmed the Insurer Financial Strength (IFS) Rating of Export-Import Insurance Company of the Republic of Belarus's (Eximgarant) at 'B'; the Outlook is Negative.
“The rating and Outlook continue to reflect Eximgarant's 100% state ownership (Belarus; Local-Currency Long-Term Issuer Default Rating (IDR): B/Negative) and the insurer's systemic role as the local export credit agency, as reflected by the state guarantees for insurance liabilities under compulsory lines and export insurance. The rating also reflects Eximgarant's robust profit generation, adequate capital position, significant exposure to domestic financial risks and the weak quality of the insurer's investment portfolio.”
“The Belarusian state has established strong support for Eximgarant through its legal framework to develop a well-functioning export insurance system. In February 2021, new regulation on export development was enforced, which confirmed the exclusive right of Eximgarant for state guarantees in the export insurance, but has also established incentives for a wider usage of bank and insurance instruments by Belarusian exporters. As a result, Eximgarant expects to see strong growth in the percentage of exports to be covered by insurance. Despite the potential rise of competition, Fitch believes that the new regulation will not weaken Eximgarant's business profile.”
According to Fitch, Eximgarant reported a stronger net income of Br54 million ($21.1m) in 2020, compared with Br27 million in 2019. This was due to an increase in FX gains of Br32 million ($12.5m) in 2020 from FX losses of Br2 million ($780,200) in 2019. However, the underwriting result weakened, with the combined ratio at 120% in 2020 from 103% in 2019. This was due to the poor underwriting result of the financial risk and export insurance. Eximgarant had few paid and reserved claims, but their impact on its underwriting result was rather pronounced due to the high levels of net retention and a geographical concentration in export insurance.
Eximgarant remains considerably exposed to domestic financial risks insurance, which accounted for 34% of its non-export portfolio per gross written premiums (GWP) in 2020. Eximgarant writes various kinds of credit default insurance for loans issued by Belarusian banks and for corporate bonds. The large exposure and the absence of local government guarantee on financial risks insurance negatively affects Eximgarant's credit profile.
Beleximgarant (Belarus Eximgarant) is a state-owned company that has been operating since 2001, providing insurance coverage for export contracts of Belarusian companies and insurance coverage of export loans. The company is a member of the International Union of Credit and Investment Insurers. End