RUSSIA: pretax profit of insurers increased by 19.2% y-o-y in the first quarter of 2020

24 June 2020 — Marina MAGNAVAL
For the first three months of 2020, insurers' ROE was 33.2% (vs 31.4% a year ago), quite high according to the Central Bank of Russia, as mentioned in the report on the key performance indicators of the insurers' activity.

Pretax profit in 1Q2020 increased by 19.2%, to RUB 71.6 billion (~EUR 0.83 billion*). Return on assets (ROA) amounted to 8%. According to the Central Bank, profit increased despite growing volatility of the stock market, in instruments of which insurers invest almost 50% of their assets. Under the current conditions, insurers' profitability could have been supported by temporary regulatory measures adopted by the Bank of Russia.

Total amount of assets exceeded RUB 3.5 trillion (~EUR 40.82 billion*) or 3.2% of GDP. Concentration of insurers in terms of assets increased: share of TOP-20 in total assets increased by 2 p.p. y-o-y to 81%. This was facilitated by a reduction in the number of insurance organizations to 173 (-20 per year).

The combined loss ratio also increased to 89.9% (+4.9 p.p. y-o-y). However, despite this increase, the combined loss ratio of Russian insurers is at an acceptable level - its value is below 100%, which indicates profitability of insurance activity. But the dynamics of this ratio in 2020 will largely depend on the impact of the economic situation on the market premiums and paid claims, the regulator noted in its report.

* EUR 1 = RUB 85.7389 (as of April 1, 2020)

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