RUSSIA, 1Q2017: Premiums accepted by local reinsurers decreased by 15.65%; RNRC accounts for 4% of the outgoing reinsurance premium

In 1Q2017, the volume of premiums accepted in reinsurance by the Russian companies decreased by 15.65% and totaled RUB 9,747.14 million, of which RUB 5,930.92 million accepted premiums inward of RF and 39.15% outward of the RF.

The market's conditions made small-middle specialized players to leave the market, including names like UNITY Re, TRANSSIB Re, JASO, TRANSNEFTI, etc. Thus, due to the "disappearance" of Russian specialized reinsurers the volume of incoming reinsurance business attracted from abroad decreased by 32.82% to RUB 3,816.21 million.

A RNRC (Russian National Reinsurance Company) report noted that the decline in premiums on the local market is caused also by "the decrease in the activity of a number of Russian players, such as ROSGOSSTRAKH, KAPITAL Insurance, VTB Insurance, SCOR". Thus, the inward incoming reinsurance market, which amounts to about 60.84% of the total gross premium accepted in reinsurance practically remained at the level of 1Q2016 and totaled RUB 5,930.92 million.

"On the international line, almost all major players (except: SOGAZ) have lowered their indicators, which is not surprising - reinsurance agreements are denominated in foreign currencies, as well as the ruble figures depend on exchange rates. The average rate of the currency basket from 1Q2016 to 1Q2017 has changed by almost 30%, which affected the performance of the premium. The impact on the local market was relativelly low, although it is significant for international players (SCOR, CHABB, AIG)", stated RNRC's report. As a result, almost all countries-partners of the Russian incoming reinsurance business decreased their business.

In the reporting period, the total volume of GWP ceded in reinsurance dropped down by 20%, to RUB 29,435.52 million, due to the decline by 24.71% of the premiums transferred in reinsurance by Russian companies to the international market.

There are two trends on the market, reads the report:
  • Some large companies increased the capacity of their obligatory contracts, which also leads to a reduction of facultative outgoing reinsurance (for example: INGOSSTRAKH and SOGAZ);
  • There is tendency to conclude contracts on the basis of co-insurance, which also leads to an increase of obligatory capacities and a reduction in the placement of risks in facultative reinsurance, which generally reduces the volume of the outgoing premium.
RNRC's share in the outgoing reinsurance premium represented only 4%

The RNRC's share in the incoming reinsurance market amounted to 12%, while the company's share in the outgoing reinsurance premium was only 4%, which is much less than the obligatory cession of 10% established by the law.

"We expected that due to the entry into force of the law from January 1, 2017, part of the liabilities under reinsurance contracts beginning on January 1, 2017, will be placed in reinsurance at the end of 2016. But we did not expect the difference to be so significant (...)", mentioned Nikolai GALUSHIN, President, RNRC.

At the beginning of 2017, Igor ZHUK, Director of the Department for the insurance market of the Central Bank of the Russian Federation stated that according to the results of 1Q2017, the Central Bank of Russia will check the risks that insurers transferred to the RNRC as a cession. According to official, about a third of the reinsurance market were representing different reinsurance scheme.

The full report here.





Related articles

RNRC was registered in China as a foreign reinsurer

The Russian National Reinsurance Company (RNRC) has got the Chinese market watchdog's approval to operate as a foreign reinsurer on the China's specialty market, a company's official press release said.

2017-07-26

ON THE MOVE

TOP EVENT

61st "Rendez-Vous de Septembre" ends today in Monte Carlo: review

The 61st edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers ends today in Monte Carlo. The Nat Cat insurance protection gap, as well as the global insurance market readiness to deal with the increasing complexity of the cyber risks were among the most debated topics.

14.09.2017

photodune-3834701-laughing-girl-xs

MONTE CARLO: Live news from the "Rendez-Vous de Septembre"

The 61st edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers has started yesterday in Monte Carlo. XPRIMM publications on the CEE, SEE and CIS insurance markets are available at the XPRIMM stand in Fairmont Hotel as well as at the other event's venues.

10.09.2017

See all