At year-end 2016, the Russian reinsurance market has stabilized and showed positive dynamics. The volume of premiums transferred by Russian companies to reinsurance grew by 9.5% and reached RUB 132.1 billion, of which 85% were transferred to the international market, and 15% to the reinsurers of the Russian Federation.
Taking into account the RUB 16 billion of premiums on inward reinsurance from the international market, the total volume of premiums on inward reinsurance in Russia grew by almost 2% to RUB 35.9 billion, which is significantly less than in 2012-2014, when the market did not fall below RUB 42 billion (Figure 1).
The decrease in the volume of inward reinsurance occurred in 2015 due to a sharp reduction in the internal reinsurance market. This process was the result of withdrawal of a significant number of players from the market due revocation of licenses by the regulator.
At the same time, the market is left by reinsurance companies, for which it is difficult to compete with large Russian multiline companies, let alone foreign reinsurers. The low level of trust in national companies, low credit ratings, and direct insurance competition prevent Russian insurers from participating in placing the most interesting and lucrative risks in the territory of the Russian Federation.
The downgrade of the Russian Federation and the automatic lowering of all corporate ratings have limited the ability of Russian insurers to attract inward business in the international market. As a result, the number of players in the inward reinsurance market declined from 104 to 76 in 2015. In 2016 this process continued, and according to the results of the year, only 64 companies reflected inward reinsurance operations in their reports.
The growth in outward reinsurance is partly due to the 'preparation' of some companies for the start of the RNRC operation. In addition, there has been no major change in the outward reinsurance structure.
The share of reinsurance premiums transferred abroad is constantly growing. From 2012 to 2016, premiums transferred to the international market increased from RUB 79.4 billion to RUB 112.5 billion .
The growth of premiums transferred abroad was affected by cleaning of the domestic market in 2015, and the growth of transferred premiums in ruble terms due to the growth of foreign exchange rates. In 2014, the average euro exchange rate increased by 20%, while the premium transferred abroad — by 22%. At the same time, the share of outward reinsurance increased significantly, especially in corporate property insurance - from 44 to 50%. However, the continued growth of the rate in 2015 and partly in 2016 did not affect the growth of outward reinsurance.
The volume of international inward business in 2015 decreased, and taking into account the exchange rate dynamics, the market volume in the foreign currency decreased even further.
In the inward reinsurance market, the concentration process continues. In 2016, 39% of premiums fell on 2 companies - Sogaz and Ingosstrakh, whereas in 2012 this figure was 19%. Top-10 largest inward reinsurance companies held up to 77% of the market in 2016, while in 2012 their share did not exceed 47%.
In the segment of international inward reinsurance, the concentration is even greater. Only 4 companies (Sogaz, Ingosstrakh, ACE and AIG) have a premium volume of over 1 billion rubles, accounting for 57% of the market, while the top 20 companies account for 97% of premiums in the inward international reinsurance market from abroad.
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