The credit rating of Joint-Stock Company “ASKO-Center Insurance Company” (hereinafter, ASKO-Center, or the Company) is based on its moderately strong business profile and financial profile and satisfactory quality of corporate governance.
ASKO-Center is a small regional company that was founded in 1991. The Company’s operations are focused on several regions of Russia’s Central Black Earth economic region. The Company’s key areas of activity are vehicle insurance, voluntary medical insurance, and accident insurance, which accounted for around 85% of its premiums for 2020.
The moderately strong business profile of the Company stems from the combined assessment of its position in the insurance market and its operating indicators. The diversification of the Company’s sales channels and quality of its product line are assessed as average, while the diversification of the client base is below average. The Company’s client base continues to be concentrated on the Kursk Region. The assessment of the quality of the product line stems from the limited range of insurance products offered by the Company. At the same time, ACRA notes that ASKO-Center is able to meet its clients’ needs, including through additional insurance products provided by the Company’s partners. The Company’s market position is assessed as being between sustainable and weak because on the one hand, its niche position in the regional market is stable, yet on the other hand, it faces risks related to the presence of major players in the market.
ACRA confirms the moderately strong assessment of the Company’s operating indicators, but notes a continued decline in insurance premiums in 2020. This is due to both the conservative risk acceptance policy and the overall economic situation in the market in 2020. Last year, the combined ratio of the Company amounted to 0.67; in the future it is not expected to exceed this level. This points to ASKO-Center’s high operating efficiency. In ACRA’s opinion, maintaining the underwriting policy and the high level of competition in the insurance market may limit the rates at which ASKO-Center’s insurance premiums grow (it is highly probable that these rates will remain below the market average in the future).
The moderately strong financial profile is based on the capital adequacy assessment, which has declined compared to last year’s indicator, but at the current level does not worsen the financial profile assessment. The asset quality and liquidity assessments remain unchanged since last year.
Higher risk associated with concluding major property insurance agreements with legal entities amid an absence of growth in equity puts pressure on the capital adequacy assessment. This leads to the ratio of available capital to capital at risk, calculated according to ACRA’s methodology, falling to 1.9. When combined with the low absolute size of internal funds (RUB 350 mln), the Company’s capital adequacy can be assessed as average.
ASKO-Center invests in low-risk assets (the weighted risk index is 1.7) and maintains a high capital to asset ratio (0.76). Therefore, ACRA maintains the Company’s asset structure assessment at the highest level. The final asset quality assessment (moderately strong) is due to the high concentration of assets. In 2020, the Company increased the diversification of its assets by acquiring highly-liquid securities. However, according to ACRA’s assessments, the level of concentration remains high (29% of assets are held in a single bank and the ten largest investments account for 82% of the total value of assets).
The Company’s strong liquidity position is due to significant current and long-term liquidity ratios — 4.07 and 3.76, respectively.
The quality of management of the Company has been assessed as satisfactory taking into account the neutral scores received by all the components of this factor. The Company’s management has extensive experience, however ACRA has reduced the assessment of this component to neutral because of the high key employee risk that derives from the CEO of the Company.
The Stable outlook assumes that the rating will most likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
A negative rating action may be prompted by:
There are no outstanding issues.
The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Insurance Companies Under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of Joint-Stock Company “ASKO-Center Insurance Company” was published by ACRA for the first time on February 28, 2020. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on the data provided by Joint-Stock Company “ASKO-Center Insurance Company”, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the GAAP and IFRS financial statements of Joint-Stock Company “ASKO-Center Insurance Company”. The credit rating is solicited, and Joint-Stock Company “ASKO-Center Insurance Company” participated in its assignment.
No material discrepancies between the provided data and the data officially disclosed by Joint-Stock Company “ASKO-Center Insurance Company” in its financial statements have been discovered.
ACRA provided no additional services to Joint-Stock Company “ASKO-Center Insurance Company”. No conflicts of interest were discovered in the course of credit rating assignment.
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