Insurers were forgiven abroad – Newspaper Kommersant No. 217 (7418) dated 11/23/2022
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The Central Bank has introduced new concessions for insurers in matters of solvency and financial sufficiency. The measures are designed to help avoid regulatory risks, remain resilient in the event of unforeseen losses, and also live without injecting additional funds into capital. At the same time, market participants emphasize that one of the main problems of the industry remains the settlement of large losses against the background of a decrease in reinsurance opportunities under the conditions of sanctions.
The Bank of Russia has adjusted the requirements for the financial stability and solvency of insurers.
So, from next year, when calculating capital, insurers will be able to take into account, in particular, the rights of claim to Belarusian reinsurers with full state participation without taking into account the rating, payments from European settlement centers, as well as from international reinsurers and refined gold in bars, which fell under sanctions, follows from the indication Central Bank, published on November 22.
In addition, the requirements for accounting for the transfer to the insurer of the right to claim compensation for losses from the hull insurance policyholder have been relaxed and the requirements for accounting for outgoing reinsurance when calculating capital have been clarified.
According to the Bank of Russia, the assets of insurance companies as of mid-2022 were estimated at 4.3 trillion rubles, capital – 1.0 trillion rubles. At the same time, 41% of assets are corporate and government bonds, 16% – bank deposits and receivables, 5% – insurance reserves, 4% – shares, 3% – cash, 1% – real estate, 13 % – on other assets.
Tatyana Nikitina, senior director of ratings for financial companies at the NRA, explains that the changes will allow insurers not to adjust capital for the amount of assets. They include claims and frozen assets that are on the balance sheet of a significant part of insurers, she points out. According to her, the cost of savings can go into billions of rubles. At the same time, gold and pending operations may be classified as other financial assets, and claims against foreign reinsurers may be classified as receivables.
According to Aleksey Yanin, managing director for ratings of insurance and investment companies at Expert RA, a reduction in the burden on capital allows an insurance company to be more resilient in the event of unforeseen losses and asset value fluctuations. A shortage of the insurer’s regulatory capital may result in sanctions from the Central Bank, up to and including revocation of the license (see Kommersant dated February 4).
Igor Ivanov, deputy general director of RESO-Garantia, adds that these measures will allow insurers to live without injecting additional funds into capital.
A significant amount of securities owned by Russian residents was frozen in European depositories (in particular, Euroclear and Clearstream). The probability of their unblocking before the sanctions are lifted is low, while such securities may affect the calculation of insurers’ own funds, explains Anna Avakimyan, chief analyst at RegBlok. The interlocutor of Kommersant in the insurance market adds that in this case the Central Bank gives clarifications on the accounting for certain categories of securities, from which it is either impossible to get out, or this is associated with very large losses.
However, according to Kommersant’s interlocutor in the insurance market, from the point of view of strategic development, the main problem remains the settlement of large losses (both current and possible) and the issues of expanding reinsurance with the replacement of foreign reinsurance organizations. “Losses affect the capital of insurers more than the nuances of accounting for financial instruments, and reinsurance protection is the only way to take big risks for corporate clients and not disrupt the financial stability of the sector,” he explains.
The ARIA said that they are currently consulting with the Bank of Russia on measures to support the insurance industry. Insurers believe that it is premature to remove the previously introduced concessions (see Kommersant of October 28). The Central Bank reported that in the future it is planned to clarify risk assessments, and do not exclude the removal of already introduced easing.
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