XPRIMM: How would you describe the growth of the Russian insurance market by 2% in the first half of 2015?
Dmitry GARMASH: This figure is a dramatic drop down from growth rates the market experienced during 2010-2014. Unfortunately, it represents the overall Russian economy recession and comprises the more negative inner sectoral insurance dynamics. E.g. the number of policies issued across various lines of business decreased from 7% to 30% in the average; volume of corporate property dropped by around 11%; construction insurance is forecasted to sag by 30% by the end of the year. The macroeconomic environment grounding all these negative changes involves a severe devaluation of Ruble, 8-10% inflation and other threats. Insurance is a kind of "downstream", derivative segment to the material sectors of economy - trade, construction, metallurgy, oil & gas, etc - so all negative trends there do finally affect insurance, and consequently reinsurance.

XPRIMM: Due to decision of the Central Bank of Russia, more than 40 insurance companies have left the market recently. How would you comment on that?
Dmitry GARMASH: The new, rather strict policy of CB, introduced two years ago, is directed to a completely right way to target market sanitation. The tough control over financial strength, quality of assets and correct market behavior should clean the insurance market from weak, non-professional, very small or empty and idle insurance companies to further concentrate services with the large, reliable players.

XPRIMM: How was resolved the problem with reinsurance coverage for major Russian sanctioned risks? At what stage is the process of creating a national reinsurance company?
Dmitry GARMASH: As far as we aware, Russian insurance community didn't succeed finding a proper, sufficient support from so called alternative markets (predominantly, from China, Asia, MENA) to cover the major portion of sanctioned exposure where the traditional Western markets can't be of support anymore. Thus, the ground for creating a state owned reinsurer looks reasonable to guarantee the high-valued state interests domestically and overseas with a stake on large scale projects (property, construction and cargo for international trade). The final outcome and market results would highly depend on the deployed conception and model of such state reinsurer: whether it to work with only sanctioned and, say, CAT-exposed risks, or to go open market too where the obligatory cessions could easily ruin the economic mechanisms in the market.

XPRIMM: How would you characterize the current status of the reinsurance business in CIS & CEE regions? What are the main tendencies that you could underline?
Dmitry GARMASH: The reinsurance business in CIS region remains rather volatile and vulnerable to the general regional and domestic economies trends. This is what determines the volume of business available both for treaty and facultative reinsurance. From purely technical point of view, the market is still very soft, very competitive, with quite a low risk representation culture. This is a result of corporate risk management still being quite poor.

XPRIMM: How "soft" are the markets in mentioned regions? How do you appreciate the reinsurance tariffs for these countries' overall?
Dmitry GARMASH: The trends here are roughly the same as for recent years. The competition in the primary insurance is vast, and it is currently quite flexibly supported by a soft reinsurance market, where plenty of rated capacity is available from around the world. Such environment exposes reinsurance to a severe drop of rates both on treaty and facultative, a considerable risk anti-selection threat for market new-comers and finally a poor risk balance to arise once the global soft market stage turns to a hard one.

XPRIMM: What was the BARENTS Re's approach towards these markets this year?
Dmitry GARMASH: After opening our Moscow office in the beginning of 2014, in 2015 we continued to penetrate the region, however doing our best to balance the soft market demands and our underwriting approach in terms of pricing, risk appetite and technical requirements. It's difficult and challenging, however the quality of business book is prevailing for us, and the key target is to maintain a high-quality risk selection backed by our expertise and underwriting skills offset by all the market trends. And we go on making a stake on our high-speed response to clients and flexible approach of being prepared to dialogue and negotiate many aspects of a particular treaty or facultative submission.

Note: BARENTS Re is the largest privately owned reinsurance company in Latin America and is doing business with over 500 clients in 55 countries, offering a wide range of traditional, niche and specialty reinsurance products, to Non Life and Accident & Health insurance companies. The company has offices in Paris, Miami, Beirut, Madrid, London, Rome and has opened a representative office in Moscow in April 2014. A.M. BEST has upgraded the rating for BARENTS Re to "A", with a stable outlook.