AM Best Affirms Credit Ratings of GIC Perestrakhovanie LLC

BY Business Wire | CORPORATE | 09/17/21 09:33 AM EDT

LONDON--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of ?bbb? (Good) of GIC Perestrakhovanie LLC (Russia) (GIC Re Russia). The outlook of these Credit Ratings (ratings) is stable.

GIC Re Russia was established in 2018 as a wholly-owned subsidiary of General Insurance Corporation of India (GIC Re), which previously operated in Russia through a branch operation. GIC Re Russia commenced underwriting business in September 2020.

The ratings reflect GIC Re Russia?s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management. The ratings factor in a rating lift from GIC Re, due to the implicit and explicit support that GIC Re Russia receives from the group.

GIC Re?s commitment to its subsidiary is demonstrated by the provision of an unconditional parental guarantee and a 97.5% whole-account quota-share treaty. In addition, GIC Re Russia benefits from sharing its parent company?s brand name and operational resources.

GIC Re Russia?s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best?s Capital Adequacy Ratio (BCAR), which AM Best expects to be maintained at the strongest level through a forecast period of five years. The company?s BCAR analysis takes into account AM Best?s additional capital requirements for new company formations. The parent company, GIC Re, has injected total capital of approximately RUB 1.1 billion into GIC Re Russia so far, and further capital injections are expected to support business growth and cover start-up costs, if needed. GIC Re Russia has a conservative investment strategy, although AM Best notes the company?s exposure to the high financial system risk in Russia. An offsetting factor in the balance sheet strength assessment is the company?s relatively small capital base, which increases the likelihood of fluctuations in risk-adjusted capitalisation.

The adequate operating performance assessment considers the group?s five-year business plan and the performance track record of an existing book of business, which was previously managed by GIC Re and is now being underwritten by GIC Re Russia. AM Best expects GIC Re Russia to grow its Russia and regional portfolios gradually, although the company is likely to face strong competition from larger and more established peers.

This press release relates to Credit Ratings that have been published on AM Best?s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best?s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best?s Credit Ratings. For information on the proper use of Best?s Credit Ratings, Best?s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best?s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright ? 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article