RNRC: GWP increase of 27% in Q3 as compared with Q2/2017
By types of reinsurance, the most significant part in the reinsurer's portfolio is held by corporate property reinsurance of legal entities, CAR/EAR and space risks, together accounting for a 56% share. Aviation risks follow, with 15% share in portfolio structure, while liability agreements are representing about 10%. Moreover, the share of the segment classified as "Others" doubled, reaching up to 11%, especially due to GWP on Motor Hull.
In the analyzed period, the volume of international business reached to RUB 77 million and represented 1.5% from the total re/insurance portfolio.
RNRC records RUB 1.2 billion profit in January - September 2017
Net profit of the RNRC for 9 months of 2017 amounted to RUB 1,173 million. Practically, the net profit remained at the level of the first half of the current year, due to an increase of reserves for reported losses in the Q3 by more than RUB 1 billion. One of the main reasons was the loss recorded by the mine owned by the company AK "Alrosa" in Mirny city.
The total investment income amounted to RUB 1.6 billion. Payments for the claimed losses totaled RUB 20 million. The reserves for declared losses exceeded RUB 1.4 billion.
Loss ratio has been impacted by the large-scale reported losses
The combined ratio for the first 9 months of 2017 was 107%, including a loss ratio of 86%. The growth of the loss ratio from 47% in 1H2017 to 86% for 3Q2017 was caused by the insurance event at the "Mir" mine of ALROSA, as a result of the RUB 919 million loss recorded in the RNRC under the obligatory agreement with SOGAZ.
RNRC expects gross written premiums for 2017 of about RUB 7.3 billion, slightly lower than planned. RNRC's net profit has been adversely impacted by the large-scale reported losses of ALROSA's mine and the fire reported in the shopping center Sindika in Moscow. The net profit expected for 2017 will be RUB 1.8 billion, 33% below the planned RUB 2.5 billion. At the end of 2017, RNRC anticipates the combined ratio to stay at 95% and the loss ratio at 76%.
Budget for 2018
According to the budget approved by the RNRC's Supervisory Board for the 2018 financial year, GWP are expected to reach RUB 12.5 billion, while the net profit target was set to RUB 5.7 billion, which corresponds to the adopted reinsurer's strategy for 2017 - 2021 years.
According to Nikolai GALUSHIN, President of RNRC, "a significant increase of the business volume in 2018 will be based on the growth of the RNRC's share on the Russian reinsurance market, the company's activity on foreign markets, as well as the increase of the own retention in reinsurance contracts more than 10%" .
The full RNRC report is available for download here
The Russian National Reinsurance Company started operations in last October, after obtaining accreditation and concluding cooperation agreements with leading international insurance brokers such as March, Willis, Aon Insurance brokers LLC, Guy Carpenter & Company, RFIB Group Limited, etc. The company's goal is to enter the international market where RNRC is already able to offer a supporting capacity up to USD 40 million. By 2018 the company plans are to grow to the position of leading reinsurer in Russia and take to its own retention significant shares of major risks.
RNRC was established by the Central Bank of Russia pursuant to the Parliament law on the mandatory cession for all Russian insurance companies. 10% of every Russian risk transferred to reinsurance should be offered to RNRC. As for the shares in the risks of the companies that are under the international sanctions regime, RNRC must take them for reinsurance in the amount of 10%. RNRC is allowed to undertake all other risks according to its own underwriting policy. The company's priorities are space, aviation, nuclear, building and construction, property risks as well as reinsurance of liability and goods, in which the company's specialists have a world-level competence.