The financial strength rating of Russian Reinsurance Company JSC (Russian Re) has been downgraded by A.M. Best from “B+ (Good)” to “B (Fair)”.
In addition, Russian Re’s issuer credit rating has been downgraded to “bb+” from “bbb-”. The outlook remains negative.
A.M. Best explained that the ratings actions reflect a material deterioration in Russian Re’s risk-adjusted capitalisation at year-end 2015. The reduction in capital adequacy stems from the weak underwriting performance of the company during the year, primarily a result of a change in reserving practices enforced by regulation.
During the first half of 2016, Russian Re showed improved underwriting performance and, according to A.M. Best, the company is on track to return to operating profitability by year-end.
A.M. Best suggested that Russian Re will likely continue to face significant challenges in growing profitably both in its domestic and foreign markets as a result of increased competition.
