TEXT-S&P rates Giva 'B' on core status to Pomosch

(The following statement was released by the rating agency)

Oct 11 - Overview

-- According to our criteria we view Russia-based Giva Insurance CompanyLLC (Giva) as "core" to insurance company Pomosch (IC Pomosch) owing to theirlevel of integration.

-- We are assigning our 'B' financial strength and counterparty creditratings and 'ruA-' Russia national scale rating to Giva.

-- The stable outlook reflects that on IC Pomosch. Rating Action

On Oct. 11, 2012, Standard & Poor's Ratings Services assigned its 'B'long-term financial strength and counterparty credit ratings and 'ruA-' Russianational scale rating to Giva Insurance Company LLC (Giva). The outlook isstable.


Standard & Poor's considers Giva to be a core company to Pomosch InsuranceCompany Ltd. (IC Pomosch; B/Stable/--; Russia national scale 'ruA-'), owing toits operational, strategic, and financial integration. Giva and IC Pomosch arecontrolled by the Loktaev family.

In our opinion, Pomosch and Giva are highly integrated. The companies sharethe same management team, operational functions, and risk controls. We notethat Giva operates more as a department of IC Pomosch by providing insuranceand reinsurance products for corporate clients of IC Pomosch. We also notethat reciprocal reinsurance treaties are in place between the two companies.

The shareholders have a history of commitment to Giva. They increased itsshare capital to Russian ruble (RUB) 621 million (about $20 million) in 2011from RUB121 million in 2010 due to new regulatory capital requirements thattook effect on Jan. 1, 2012. Giva constitutes a significant proportion (62%)of the IC Pomosch's share capital. Based on our capital model, Giva's capitaladequacy ratio is calibrated somewhat above the rating on IC Pomosch.

We expect that Giva will be sufficiently capitalized relative to its riskprofile and shareholders will remain committed to the development of thecompany in the future.

Giva was bought in 2009. Giva's gross premiums written (GPW) in 2011 amountedto about $0.6 million, which is less than 1.5% of GPW generated by IC Pomosch.However, we expect premiums to continue to grow by about 30% in 2012-2013.


The stable outlook reflects that on IC Pomosch. As such, any change to theratings on IC Pomosch could trigger a similar rating action on Giva.

If we were to revise Giva's status from "core", we could lower the ratings. Astatus revision could result from Giva's ceasing to operate as a departmentwithin IC Pomosch, or if Giva's business profile changed significantly, or ifGiva were to substantially reduce capital levels, experience ongoingdeterioration in earnings, or if the reciprocal reinsurance treaties ceased toexist.

Related Criteria And Research

-- Refined Methodology And Assumptions For Analyzing Insurer CapitalAdequacy Using The Risk-Based Insurance Capital Model, June 7, 2010

-- Group Methodology, April 22, 2009 -- Interactive Ratings Methodology, April 22, 2009

-- Criteria Update: Factoring Country Risk Into Insurer FinancialStrength Ratings, Feb. 11, 2003

Ratings List New Rating Giva Insurance Company LLC Counterparty Credit Rating Local Currency B/Stable/-- Financial Strength Rating Local Currency B/Stable/-- Russia National Scale Rating ruA-

((Bangalore Ratings Team, Hotline: +91 80 4135 5898Debanjali.Ghosh@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, ReutersMessaging:Debanjali.Ghosh.reuters.com@reuters.net))