The 'B+' rating indicates that the rated entity qualifies as an acceptably reliable insurance company. The full or partial default risk is low.

Insurance Stock Company Ingvar (license no. 0425 77 issued by the Bank of Russia on December 23, 2013) has been operating in the market of insurance services since 1993. The company is a niche market player primarily focused on cargo insurance services (other kinds of insurance account for no more than 5% of the premiums). The insurance company is basically active in Moscow region mostly providing services to corporate clients.

We regard the low loss ratio attributable to insurance operations, the high equity capital adequacy and the high financial solvency of the insurance company as the main positive rating drivers.

The loss ratio (the ratio of insurance benefits to insurance premiums) for 9 months of 2014 was a mere 8.0% (5.4% in net terms), a record low for the market of non-compulsory insurance services other than life insurance services (the nearest gross loss ratio of 8.1% being in the segment of civil liability insurance against damage due to product defects, drawbacks of works, services). Nevertheless, the high volatility of the said ratios (18.5% and 16.2%, respectively, in 2013) proves the absence of a systemic trend so far.

The limited amount of insurance operations curbs the asset growth at the company, which keeps the balance sheet capital adequacy and insurance capital adequacy fairly high. In particular, as of October 1, 2014, equity to total assets ratio of the insurance company was 58.7%, equity to premiums reaching 179.2%, which we appreciate as a moderately positive rating driver for Insurance Stock Company Ingvar.

Another positive signal is the high distance between the actual creditworthiness margin and the minimum level (55.5% as of October 1, 2014, 14.6% higher than on January 1).

In AK&M Rating Agency's view, the recent improvements in the management of investment assets, the higher profitability and the effective reinsurance business also contribute to the Company's rating.

At the end of 9 months 2014, the company earned RUB 2.3 million in investment income winning back half of the previous year's loss in this segment (RUB 4.6 million), but the Company's investment profitability ratio (approximately 1.7%) is still far from the applicable benchmarks. Its overall business profitability, however, is a case for optimism: ROA increased almost twice from 1.55% to 3.00% in 2014, primarily owing to the low losses from insurance operations.

In the outward reinsurance segment, the Company normally partners with major, highly reliable insurance operators. The highly effective reinsurance performance is proven by the share of reinsurance agents in premiums and benefits (5.4% and 33.3% for 9 months of 2014, respectively).

At the same time, we regard the high concentration of risks within the group of major customers, the low business diversification, the high case management expenses and the problematic settlement of insurance claims as the constraining factors.

The key risk factor for the company is the abnormally high role of the anchor insurer in the Company's business (accounting for more than 90% of its operating income / insurance premiums). The potential loss of this major customer will definitely result in heavier losses and a weaker financial position (despite the simultaneous reduction in insurance benefits and acquisition costs), thereby shattering the insurance company's reliability.

The excessive concentration on cargo insurance services, the core business for Insurance Stock Company Ingvar (accounting for 95.0% of the insurance premiums, 97.8% of the insurance benefits for the 9-month period in 2014), substantially restricts the Company's development potential. At the same time, cargo insurance is one of most low-risk voluntary insurance segments, except for life insurance (the ratio of benefits to premiums being 14.1% as of October 1, 2014), which, to a certain extent, offsets the low business diversification of the insurance provider.

The high case management expenses of the insurance company (55.6% in 2013, 81.2% in 2014, growing faster than the Company's earnings) are a point of concern for the Company. Should this trend persist, the financial soundness of Insurance Stock Company Ingvar may come under serious pressure.

The ratio of successfully settled to submitted insurance claims remains fairly low (51.0% on January 1, 2014, 26.4% on October 1, 2014), far below the average market percentage (about 100% in the property insurance segment). This underperformance, may, in a way, increase reputation risks and necessitate additional provisions, even though the insurance company never denied insurance benefits (the average percentage of claim denials across the Company's core business segment reaches ca. 15%).

In AK&M Rating Agency's view, the rating of Insurance Stock Company Ingvar is additionally constrained by its limited marketing channels (mostly intermediary services of counterparties accounting for almost 80% of the contracts concluded for the 9-month period in 2014).

Despite the negative circumstances, AK&M Rating Agency makes a positive outlook on the rating reflecting its expectations of a business expansion, client base diversification, more effective investment operations and lower case management expenses.

Insurance Stock Company Ingvar established in March 1993 specializes in the insurance of motor vehicles, personal and corporate property, insurance against construction risks, insurance against accidents and cargo carriage insurance (the latter being its core business).

The Company has license C no. 0425 77 issued by the Bank of Russia on December 23, 2013.

At the end of 9 months of 2014, Insurance Stock Company Ingvar ranked 236th among the 362 currently operating Russian insurance companies in terms of premiums (42nd among 193 companies in the cargo insurance segment).

This press release is based on the Statement of assignment of a reliability rating to Insurance Stock Company Ingvar.

The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's creditworthiness / reliability and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC Analysis, Consulting and Marketing Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.

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