OREANDA-NEWS. December 4, 2007. Credit-Rating, a nationally recognized credit rating agency in Ukraine has today assigned a long-term credit rating of uaBB to Kiev-based BROKBIZNES Insurance Company CJSC, the agency's press service reported. In the course of analysis, Credit-Rating considered the company's financial statements for 2003-2006 and 1H2007 as well as other inside information furnished by the company.

An obligor or a debt liability with uaBB credit rating is characterized with the LOWER THAN SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is strongly affected by adverse changes in commercial, financial and economic conditions.

Factors maintaining the credit rating:

The company is associated with the legal entities united under "BROKBIZNES" brand, which contributes to company's expansion and broadening its clientele.
The company's insurance payments grew 4x in 2005-2006 to UAH16.9m from UAH4.2m, and to UAH17m in 1H2007, which already exceeds the result recorded in 2006.
The company's branch network has rapidly been growing in 2005-2006 and 1H2007, in fact the company has unveiled 21 branches and 34 sub-branches in 19 Ukrainian regions; over 39 per cent of 1H2007 insurance payments excluding outgoing reinsurance account for the company's branches (with almost 50 per cent in 9M2007).
The company's 2006 equity exceeds 3.2x the gross insurance payments collected being 2.1x higher than the company's liabilities, which witnesses adequate resource for further increase in insurance activities.

Factors constraining the credit rating:

The company's cooperation with the entities united under "BROKBIZNES" brand imposes risks of redistribution of company's funds neglecting its insurance priorities.
Almost 55 per cent of the company's assets as of Jul.1, 2007 account for the long term investments in shares, which are not included in high grades of trade system listings and can not be attributed to insurance reserves.
High dependency of the company's primary activity upon outgoing insurance, which volume approaches the allowed limits of the company which provides classical insurance services.
The company does not have a formalized strategy for niche development neither terms for reinsurance.
The company is exposed to risks of exceeding the operating expenses and insurance reimbursements over the insurance payments gained as the company further expand its activities in the retail segment of insurance.