Moody’s assigns a Ba3 IFSR to Export Insurance Agency of Armenia; stable outlook

20.01.2022 13:52
Moody’s assigns a Ba3 IFSR to Export Insurance Agency of Armenia; stable outlook

YEREVAN, January 19, /ARKA/. Moody's Investors Service ("Moody's") has today assigned Ba3 foreign and local-currency insurance financial strength ratings (IFSRs) to Export Insurance Agency of Armenia ICJSC (EIA). The outlook is stable.

EIA's Ba3 IFSRs reflect its b1 Baseline Credit Assessment (BCA), and moderate probability of support from the government of Armenia (Ba3 stable), resulting in a notch uplift above the BCA.

The full list of the affected ratings can be found at the end of this press release.

EIA is currently the only export insurance company in Armenia. It was established by the government to promote Armenian export within the framework of the export-oriented industrial policy of the republic of Armenia.

EIA's b1 BCA benefits from its solid capital adequacy relative to net total exposure with 90% of insurance risk reinsured by Swiss Reinsurance Company Ltd (Swiss Re, Aa3 stable), as well as sound financial flexibility and low financial leverage.

At the same time, these strengths are tempered by the company's modest size in global terms, low granularity of its insurance book and limited geographical diversification, investments in high-risk assets in Armenia and weak underwriting profitability.

EIA provides export and pre-export credit insurance against political and commercial risks. Its share in GPW of credit insurance sector in Armenia (including loan insurance and other financial losses insurance) amounted to around 50% as of Q3 2021.

The insurer's diversification is constrained by its limited geographical and products diversification with some sizeable single-name exposure. It has concentrations of export exposure in Russia (Baa3 stable), given the structure of Armenia's exports and long-standing relations with Russia.

EIA's asset-quality metrics reflect a high concentration of its investments in domestic assets, which mainly comprise current accounts and deposits with Armenia-based banks and investments in local bonds issued by the government of Armenia.

The company's high-risk investments, mainly deposits with local banks, accounted for around 138% of its equity as of 31 December 2020. -0-

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