OREANDA-NEWS  On 08 October Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it upgraded to uaBBB- (uaBBB minus) from uaBB+ (uaBB plus) the long-term credit rating assigned to registered coupon bonds (series B) issued by Kiev-based Insurance Company Galaxy CJSC (`issuer` or `company`). The amount of the issue is UAH25m, with 4-year original maturity. The rating outlook has been changed to stable. To revise the rating Credit-Rating considered issuer`s financial statements for 1Q and 1H2008 and its other inside information.

An obligor or a debt liability with uaBBB credit rating is characterized with the SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is affected by adverse changes in commercial, financial and economic conditions. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).

Factors maintaining the credit rating

Issuer`s increased insurance payments raised: the amount of premiums earned in 1H2008 exceeded UAH52.1m, which is almost equal to the similar indicator for 2007 of UAH58.1m, coupled with low specific gravity of operating expenses in the payments earned (less than 32% as of June 1, 2008).

High issuer`s performance profitability recorded in 2007 and 1H2008 fueled mainly with gains from insurance activity.

Further expansion of issuer`s branch network, which covers all Ukraine`s regions as of Jul. 1, 2008 (except for Volyn Oblast), through which the issuer raised a half of its net insurance premiums in January-June 2008.

Factors constraining the credit rating

The issuer requires further enhancements in the quality of its financial investments, which account for about a half of issuer`s assets: 46.7% of all its investments as at beginning of July 2008 are made in shares of the issuers, which are not included in lists of trade systems.

The issuer operates in the riskiest and hotly competitive segments, namely motor insurance, which accounts for 2/3 of issuer`s insurance portfolio as at 1H2008.