The ratings continue to reflect the 100% state-ownership of Belgosstrakh and Eximgarant, and the significant support provided by the state to the insurers by way of guarantees for the majority of their insurance risks (Eximgarant: 62% and Belgosstrakh: 73% of premiums written in 2012), as well as a record of significant capital injections.
The insurers continued to maintain their strong market positions, which are supported by the preferential treatment provided in the legislation governing state-owned insurers. Belgosstrakh continues to hold leading market positions in all compulsory lines and in a number of voluntary lines. The insurer's market share stabilised at around 50% of the sector's premiums in 2012 (2011: 49% and 2010: 52%) after a decline in previous years due to more rapid growth of voluntary lines at the sector level. Fitch views positively the decline in weight of the domestic financial risks line in Eximgarant's portfolio in 2012, which is not covered by government guarantees.
Fitch does not expect the government to withdraw its guarantees from the company's export insurance activity. Relative economic recovery and a significant fall in inflation in 2012 positively affected Belgosstrakh's and Eximgarant's underwriting profit, and both companies recorded positive operating profitability for the year, further supported by investment income. At the same time, the agency has concerns about the sustainability of these operating results in a still uncertain economic environment. These concerns are offset to some extent by the predominantly short-tail nature of the insurers' business and presence of the government guarantees for all compulsory lines, which include the most exposed long-tail workers' compensation line, exclusively written by Belgosstrakh. Based on Fitch's risk-adjusted assessment, the insurers' capital positions strengthened in 2012 after large capital injections of BYR3.2trn and BYR3.4trn into Belgosstrakh and Eximgarant, respectively. The capital increases are aimed at enhancing the insurers' underwriting capacity and facilitating retention of larger risks. Nonetheless, the agency continues to acknowledge exposure of the insurers' capital to the low quality of invested assets, which are significantly concentrated in Belarusian issuers.
Belgosstrakh was founded in 1921 and is Belarus's largest insurer with BYR2,150bn in gross written premiums in 2012 and BYR5,881bn in total assets at end-2012. Belgosstrakh has eight branches and 119 representative offices covering all Belarusian regional centres, including Minsk.
Eximgarant was founded in 2001 and is the local exclusive provider of export insurance and also holds strong market position in regular non-life lines. Eximgarant was the fourth-largest insurer in Belarus by premium volume in 2012, with BYR238bn in gross written premiums and BYR4,221bn in total assets. Eximgarant is a member of the Prague club of the International Union of Credit and Investment Insurers, which includes the largest export credit and investments insurers from developed and developing countries.
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BELARUS: FITCH affirms BELGOSSTRAKH and EXIMGARANT
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