XPRIMM: How would you evaluate the main tendencyof the Belarusian re/insurance market in 1H2015?
Andrey T. UNTON: According to the data of the Ministry of Finance of the Republic of Belarus, for the first half of 2015, insurance premiums for direct and co-insurance totaled BYR 3,991.9 billion. In the analyzing period, the growth rate of GWP was 110.5% compared to the similar period in 2014. At the same time, the claims paid by insurers totaled BYR 2,268.0 billion.

As you know, the development of the insurance industry cannot be analyzed separately of the national economy. The crisis phenomena is reflecting on the world economy, and, we have witnessed the oil price fall on the international market, which had the direct impact on the economy of the number of countries depending on the export of hydrocarbon resources and petroleum products, and also geopolitical instability in Ukraine. As result, all these led to a weakening of the national economy and currencies of developing countries, and the Republic of Belarus is no exception. Belarus economy and the insurance sector, in particular, as an indicator of the general state of the economy, could not escape all negative effects of the global economy.

Due to the global economic challenges, there is not an easy situation for such classes of business as Motor Insurance, Carriers Civil Liability Insurance, MTPL Insurance based on International Green Card Covers, Carriers Civil Liability Insurance within the framework of the TIR Convention 1975, Personal Accidents and Health Insurance during international travel.

However, the performances of the BELARUS Re show positive dynamics in terms of the insurance premiums. The growth rate of written premiums for 1H2015 compared to the same period in 2014 amounted to 142.43%. A share of insurance claims in the total sum of written insurance premiums was 14.4% (in 1H2014 this index amounted 6.0%).

In order to reduce usage of foreign currency in settlement and to increase the public confidence in the national currency the National Bank of the Republic of Belarus has been taking measures to de-dollarization of the economy. Such measures also affected the insurance sector. Thus, from March 1st, 2015 insurance companies were interdicted to accept premiums from individuals in foreign currency. An exception was made for the two insurance companies engaged in life insurance, including supplementary pension insurance.

In accordance with the amendments to the current legislation, the requirements for the minimum authorized capital of insurance organizations were raised from EUR 1 million to EUR 5 million (the equivalent in BYR). For the operating insurance companies was planned gradual increase of the minimum authorized capital till May 1st, 2017. Thus, the first stage of the capital increase took place on May 1st, 2015. In particular, the non-life insurance companies have increased their authorized capital to EUR 2.25 million, while the life insurance companies up to EUR 3 million. The second stage of growth of capital will take place on May 1st, 2016, for non-life companies up to EUR 3.25 million and, respectively, EUR 3.5 million for life insurers. Thus, the authorized funds of all insurance companies should reach to EUR 5 million till May 1st, 2017.

As a result, two insurance companies left the market due to inability of non-alignment to the new capital requirements. Another insurer's license has revoked because it has not removed offense against the law previously identified.

At the same time, in order to protect the policyholders' interest, all liabilities of the companies that left the market have been either transferred to the other insurers or the insurance contracts were anticipated to be cancelled (exceptions are the contracts under which were recorded damages) and a part of insurance premiums was returned to insured on a pro-rata basis.

Currently, on the insurance market are active 19 companies, including one reinsurance company and three companies engaged in life insurance.

Moreover, by the end of the current year, it is planned to delegate insurance regulatory authority from the Ministry of Finance to the National Bank. Thus, the National Bank will become a mega-regulator, ensuring a state control over all segments of financial market such as: insurance sector, securities market, investment funds, leasing and microfinance organizations, Forex market, etc.

XPRIMM: How the company can protect own interest in terms of currency risks under the international reinsurance contracts? In what currency is better to conclude the reinsurance contracts and what is the opinion of the foreign partners in this regards?
Andrey T. UNTON: In definition of a currency for reinsurance contract, it should be taken into account the currency in which the insurer accepted and ceded liability under the original insurance contract. A general principle applied by BELARUS Re and our foreign partners is to prevent appearance of open currency position. This principle makes it possible to minimize any risks associated with significant fluctuation of exchange rates. In addition, to eliminate the currency risk the reinsurance contract can contain a currency fluctuation clause. This clause fixes the exchange rateand is used by the reinsurance contracts parties in case of foreign currency claims settlements.

XPRIMM: What are the main priorities and development strategy of BELARUS Re till the end of 2015?
Andrey T. UNTON: The development strategy of BELARUS Re reinsurance business is determined by the unconditional implementation of the performance indicators of the business plan for 2015. In order to achieve these indicators BELARUS Re works upon the business expansion on the domestic market through participation in major investment projects.

In addition, we continue to work actively on foreign markets which do not have strict requirements to the rating of reinsurance companies in order to diversify the geography of portfolio and looking for new promising projects.