By Chris Wack
Fitch Scores stated it has downgraded six Russian insurance coverage firms’ insurer monetary energy scores, together with the debt ranking of 1 Russian insurer.
The businesses are insurance coverage joint inventory firm VSK, JSC IC Allianz, AlfaStrakhovanie Plc, Soglasie Insurance coverage Co. Ltd., Russian Nationwide Reinsurance Co. and Euroins Ltd.
Final week, Fitch’s downgraded Russia’s sovereign scores to “C” and its nation ceiling to “B-,” reflecting the company’s view {that a} sovereign default is imminent.
Fitch’s downgrades of Russia’s sovereign and nation ceiling relies on a Russian presidential decree March 5, which might drive a redenomination of foreign-currency sovereign debt funds into native forex for collectors in specified international locations, in addition to Central Financial institution of Russia regulation that has restricted the switch of local-currency authorities debt coupons to non-residents since late final week.
Fitch stated that every one six Russian insurers’ policyholder obligations are primarily denominated in rubles, but additionally embody some obligations which can be denominated in foreign currency. Fitch is assuming a portion of the policyholder obligations of the entire insurers might be uncovered to fee restrictions on account of the decree and switch restrictions. Fitch has put the entire IFS scores at “CC” to mirror this threat.
The scores firm additionally stated the downgrades primarily mirror an extra weakening of the working atmosphere of the Russian insurance coverage business brought on by deepening sanctions and Russia’s coverage responses. The sovereign downgrade has a adverse affect on Fitch’s evaluation of Russian insurers’ funding and liquidity threat, primarily by publicity to state bonds and native securities markets.
Write to Chris Wack at chris.wack@wsj.com