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 Company LLC (Giva) as "core" to insurance company Pomosch (IC Pomosch) owing to their level of integration.

-- We are assigning our 'B' financial strength and counterparty credit ratings 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-' Russia national scale rating to Giva Insurance Company LLC (Giva). The outlook is stable.


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

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

The shareholders have a history of commitment to Giva. They increased its share capital to Russian ruble (RUB) 621 million (about $20 million) in 2011 from RUB121 million in 2010 due to new regulatory capital requirements that took 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 capital adequacy ratio is calibrated somewhat above the rating on IC Pomosch.

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

Giva was bought in 2009. Giva's gross premiums written (GPW) in 2011 amounted to 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 the ratings 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. A status revision could result from Giva's ceasing to operate as a department within IC Pomosch, or if Giva's business profile changed significantly, or if Giva were to substantially reduce capital levels, experience ongoing deterioration in earnings, or if the reciprocal reinsurance treaties ceased to exist.

Related Criteria And Research

-- Refined Methodology And Assumptions For Analyzing Insurer Capital Adequacy 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 Financial Strength 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 5898 Debanjali.Ghosh@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Debanjali.Ghosh.reuters.com@reuters.net))