Russian National Reinsurance Company

Russian National Reinsurance Company (RNRC) is the largest Russian reinsurance company. RNRC is No 1 in terms of the authorized share capital (RUB 71 billion) and No 2 in terms of paid-in capital (RUB 21.3 billion) on the domestic insurance market.
Central Bank of Russia is a full shareholder of RNRC. The state-owned reinsurance company was set up as provided for by Federal Law No. 363-FZ On Amendment of the Law of the Russian Federation "On Insurance Business in the Russian Federation" dated July 3, 2016
and Art.13.1-13.3 of Federal Law No. 4015-1 "On Insurance Business in the Russian Federation".
The Company was set up by the Resolution of the Central Bank of the Russian Federation dated July 29, 2016
as Reinsurance Company NRC JSC (registered on August 3, 2016). NRC obtained reinsurance license PS No. 4351 on October 12, 2016.
Company objectives.
The low capacity of the Russian reinsurance market provided by domestic reinsurers has been a long-term concern of reinsurance specialists and insurance authorities.
It depends on the insurance type and has varied over time from $10–20 million for a single risk in 2005 to $100 million in 2015.
Reinsurance is a global and cross-border business, however, a too large share of risks and reinsurance premiums were ceded abroad instead of Russia where they could be invested in the national economy.
Sanctions imposed by the US and European Union have a detrimental impact on the ability to cede risks abroad even to reinsurers in the countries which formally do not support such sanctions.
This was the case with risks from Iran after the imposition of economic sanctions against it.
There are also insurance business lines featuring very low frequency, but very high losses amount, i.e. risks with very rare but tremendous losses.
Such risks are very hard to insure or reinsure due to the unavailability of any statistics or data to determine underwriting rates.
That risks for Russia include destruction of dams of major HEPPs, accidents involving expensive space or infrastructure facilities, grate forest fires (and as well human-made) in populated areas, devastating floods, etc.
Some risks require state reinsurance support due to high social or economic importance but low attractiveness in terms of economic efficiency for a single insurer or reinsurer. They include a wide range of risks in agricultural insurance), housing insurance against catastrophic events (flood, forest fire, earthquake, etc.).
Definite risks — especially in case of mandatory insurance — feature very specific underwriting procedures and regulatory framework in Russia, so they can’t be ceded to foreign reinsurers.
In addition, a large number of risks may not be ceded abroad due to national security issues (e.g. if their reinsurance may lead to disclosure of state secrets) or economic security (insurance of state-guaranteed orders).
To address the above issues and restrictions, the Russsain authorities represented by the Central Bank of Russia set up RNRC with objectives and tasks including:
Activity.
RNRC delivers reinsurance solutions to Russian and foreign companies in non-life insurance industry on both a Treaty and Facultative basis.
Compulsory cession.
From January 1, 2017, the provisions of Art.13.1-13.3 of Federal Law No. 4015-1 came into force that obliged all insurers to cede RNRC at least 10% in each reinsurance ceded, and RNRC to accept at least 10% of all the so-called sanction risks.
While the RNRC may not accept any risks that are not subject to sanctions.
World-wide business.
RNRC cooperates with international reinsurance brokers and writes treaty and facultative business from CIS. In 2018 and 2019 RNRC organized Summits of national reinsurers in Moscow and Saint Petersburg.
Analytical reviews.
The company regularly issues reports with the results of the analysis of the situation in the Russian reinsurance market. In addition, there are quarterly RNRC studies with a very detailed analysis of outgoing reinsurance of all Russian companies for the past quarter.
Ratings.
Analytical Credit Rating Agency (ACRA) assigned RNPK a credit rating of AAA (RU) with a stable outlook (2017),
and the rating agency Fitch Ratings - the financial stability rating BBB- with a positive outlook (2017).
Both ratings were affirmed in 2018. In 2019 Fitch upgraded rating to BBB with a stable outlook and in 2020 affirmed RNRC Insurer Financial Strength (IFS) Rating at BBB' with a stable outlook (December, 14, 2020).
ACRA affirmed rating in 2019 and 2020.