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28.04.2007
Outlook on credit rating assigned to Credo-Classic Insurance Company changed to Negative
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today affirmed at uaAA the credit rating assigned to Kiev-based Credo-Classic Insurance Company (Insurer). Outlook on the rating has been changed to Negative.
The uaAA obligor rating reflects very strong capacity of the insurer to meet its commitments on obligations in the Ukrainian financial market environment. This rating slightly differs from obligations rated uaAAA.
Negative Outlook exhibits a possibility of a rating`s downgrade in the course of the year on condition that the negative tendencies are retained and risks are under realization.
In the course of the rating`s affirmation procedure the agency took into consideration the following factors: 2006 saw change in company`s shareholders after signing an agreement with the Austria-domiciled UNIQA insurance group on step-by-step delivering the insurer`s control stock to the mentioned group. Initially UNIQA acquired 35% of the stock, and is planning to get the insurer`s control stock by 2009 year-end. The assets` "brush-up" has been conducted for bringing them to conformity with the EU standards, and the structure of securities` portfolio has also been changed. Moreover, 2006 saw insurer`s risk portfolio improvement.
The change in Outlook to Negative from Stable has been caused by insurer`s 91.6% rising expenses on insuring in 2006 and over 100% growth on sale expenses (commissions, expenditures on advertisement and agent network). The insurer`s loss amounted to UAH 3.48m as of Jan.1, 2007. Moreover, the insurer`s dependency upon key clients and partnering banks remains relatively high, specifically 2006 saw 69.3% payments gained from 10 biggest insured, with 63.6% of insurer`s funds accounting for its 3 biggest banks` deposits. The specific gravity of the payments collected in regions amounts to less than 10% of gross 2006 payments.
The significant change in insurer`s strategy called forth by new investor`s coming is primarily aimed at aggressive and high-growing retail insurance and at regional development. The insurer`s priorities are concentrated on voluntary auto insurance, which is one of the riskiest market sectors.
The Outlook on the rating may be revised in case of insurer`s successful implementation of 2007 development strategy, namely it realizes the planned performance and raises the own profit, decreases the dependency upon key clients and partnering banks, and raises gains from regional network. The above negative tendencies prevailing may call forth the rating`s downgrade.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS, BLOOMBERG and FTN MONITOR information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
