August 18, 2006 | Cbonds
On Aug. 18, 2006, Standard & Poor's Ratings Services raised its long-term counterparty credit and insurer financial strength ratings on Russia-based insurer Neftepolis Insurance Co. LLC to 'B+' from 'B', and its Russia national scale rating on Neftepolis to 'ruA+' from 'ruA'. The outlook is stable.
"The upgrade reflects a considerable improvement in the credit quality of Neftepolis' investment portfolio," said Standard & Poor's credit analyst Tatiana Grineva.
The ratings reflect high industry and country risk factors and Neftepolis' weak financial flexibility. These negatives are mitigated, however, by Neftepolis' marginal (and improved) quality of investments, solid track record of good operating performance, potentially strong position and ability to go from strength to strength in its oil-related insurance niche, and strong management team.
The stable outlook reflects the following expectations of Standard & Poor's:
-- Neftepolis is expected to be successfully integrated within SOGAZ and ongoing parental support should be provided for Neftepolis' growth and development, including financial support if such a need arises.
-- The commercial book is expected to represent significantly more than 50% of gross premiums written where Neftepolis has competitive advantages, particularly in its oil-related insurance niche.
-- Although Rosneft is to remain as one of Neftepolis' major clients, reliance on Rosneft's premium income is expected to lessen, with the company expected to contribute less than 30% to overall gross premium income.
-- Good profitability levels are expected to be maintained.
-- The quality of the investment portfolio is expected to be maintained at least at its current level.
The ratings may be raised if the potential benefits arising from Neftepolis' merger with SOGAZ are realized. The ratings may be lowered, however, should some of the expectations outlined above continuously fail to materialize in the medium term; in particular, deterioration in capitalization or in the quality of the investment portfolio
|Full company name||Neftepolis Insurance Company LLC|
|Country of risk||Russia|