|
|
Russia Insurance Report Q2 2009Published by: Business Monitor International Published: May. 21, 2009 - 92 Pages Table of Contents
AbstractThe capital shortage impacting emerging markets will be acutely felt in Russia and a systemic crisis hasthus far only been avoided through proactive government intervention facilitated by a large stockpile inforeign currency reserves. That said, the crisis risks will remain through the medium term. Indeed, thepotential for the economy's external and fiscal dynamics, as well as banking system stability, to unwind atan accelerated pace will only increase as official foreign exchange reserve stocks fall further in 2009. Notonly under such a scenario do we countenance a protracted and deep recession but also the risks of creditevents even among the country's largest quasi-sovereigns.BMI 's core scenario for Russia is decidedly bleak with an economic contraction of -4.0% for the fullyear.It is important to stress that even with this well below-consensus forecast, we continue to highlightdownside risks. With Urals oil set to average just under US$43 per barrel (/bbl) over the course of theyear, the country's external and fiscal dynamics are set to worsen considerably. The current account,which posted large surpluses since 1999 is forecast to fall into deficit by 2010, while the federal budget isexpected to flip from a 4.0% of GDP surplus to a 6.8% shortfall. Even more worrying is the stability ofthe banking system, which is likely to deteriorate further as deposit outflows, combined with a steadyincrease in non-performing loans, hammer credit growth and further deteriorate liquidity conditions. While it is already clear that Russia is headed for a recession, these factors suggest to us that the risks of asystemic crisis are concurrently rising. Importantly, the only reason why the Russian banking system andcorporate sector have not already faced a widespread default scenario akin to 1998 is because of thegovernment's liberal injections of capital into the markets, thereby effectively taking on the short-termdebt refinancing obligations of large swathes of the private sector. This has been facilitated by asubstantial stockpile of foreign exchange reserve capital which peaked at US$758bn in July 2008, notcoincidentally in the same month that oil prices hit their record high. In Central and Eastern Europe (CEE), we profile 22 multi-national insurance companies. In alphabeticalorder, these are AEGON, AIG, Allianz, Aviva, AXA, Cardif, ERGO, Eureko, Fortis, Generali,GRAWE, Groupama, HDI-Gerling, HSBC Insurance, ING, MetLife, Prudential Financial, QBE,RSA, UNIQA, Vienna Insurance Group and Zurich Financial Services. We also discuss the regionalpresence of Belgium’s KBC and Austria’s Erste Bank through a number of insurance subsidiaries andexplain the importance, for each of the various countries, of purely domestic firms. We estimate that, over the course of 2008, total premiums in Russia rose by 26% to RUB939.0bn. Nonlifepremiums rose by 26% to RUB920.5bn, while life premiums rose by 39% to RUB18.5bn. Between now and the end of the forecast period, we estimate that annual non-life premiums will grow byRUB905.9bn, while annual life premiums should increase by RUB47.9bn. Growth in non-life premiums should be driven by the general growth in nominal GDP plus a rise in nonlifepenetration from the current estimated level of 1.9% to 2.5%. Growth in life premiums should be driven by the change in the overall population and a rise in life densityfrom an estimated US$6.34 to US$15.00 per capita. BMI’s Insurance Business Environment Rating (IBER) for Russia is 58.3. Get Full Details About This Report >> |
|
|||
|
About MarketResearch.com
|
||||