A rating is an independent agency's concise opinion on how likely a company is to meet its financial obligations. For an insurer, that primarily means the ability to pay claims. Let's look at where ratings came from, who assigns them in Russia and how to use them.
A bit of history
The rating industry emerged in the United States in the early 20th century: independent analysts began assessing borrowers' ability to repay debts and ranking them by probability of default. Over time ratings became a standard: investors and banks formalised investment rules based on ratings, and a high rating came to mean cheaper financing.
Ratings have weaknesses too. The 2007–2009 financial crisis began partly because bonds backed by unreliable US mortgages received high ratings. Later the agencies were criticised for lagging behind during the eurozone debt crisis, and the downgrade of the US sovereign rating in 2011 caused a violent market reaction. The conclusion is simple: a rating is an important guide, but not the final word.
Who assigns ratings in Russia
The activity of rating agencies in Russia is governed by Federal Law No. 222-FZ "On the Activity of Credit Rating Agencies in the Russian Federation". Agencies must be included in the Bank of Russia's register. There are currently four agencies on it:
| Agency | Highest rating on the national scale |
|---|---|
| ACRA (Analytical Credit Rating Agency) | AAA(RU) |
| Expert RA | ruAAA |
| NCR (National Credit Ratings) | AAA.ru |
| NRA (National Rating Agency) | AAA|ru| |
International agencies withdrew their ratings of Russian companies in 2022, so national scales are used to assess insurers today.
How to read the scale
Different agencies' scales follow similar logic, though the notation differs:
- AAA — the highest reliability on the national scale;
- AA (with plus or minus) — very high reliability;
- A — high reliability, but greater sensitivity to adverse conditions;
- BBB — moderate reliability; this is the lower bound of the so-called investment grade;
- BB and below — speculative grade: the risk of default is noticeably higher;
- D or equivalent — default.
Outlook and status
An outlook is shown next to the rating: "stable", "positive" or "negative". It indicates where the rating may move over the next year. It is also noted if the rating is "under review" or "on watch" — a signal to look more closely at the company. If a rating has been withdrawn, it is important to understand why: at the company's request or because of a deterioration in its position.
Who needs an insurer's rating and why
- Individual clients — as a quick reliability filter, especially for long-term contracts: life insurance and savings programmes.
- Borrowers — when accrediting insurance companies for mortgage insurance, banks often take the existence and level of a rating into account.
- Businesses — when insuring large risks, tenders and procurement often set a minimum insurer rating.
- Insurers themselves — ratings are considered when choosing reinsurers and partners.
How often ratings are updated
Agencies review ratings at least once a year, and on an ad hoc basis when significant events occur. So check the date of the last rating action: an assessment from two years ago may not reflect the company's current position.
Why a rating is not enough
A rating assesses financial stability but says nothing about the quality of claims handling, payment times or attitude towards clients. Moreover, some insurers have no rating at all — this is not always a sign of unreliability, since ratings are paid for and assigned at the company's request. So take a comprehensive view:
- a valid licence in the Bank of Russia's register of insurance market participants;
- a rating and outlook from an agency on the central bank's register;
- published financial statements and the size of capital;
- claims practice in the line of insurance you need, complaints and appeals to the financial ombudsman;
- clear insurance rules and claims settlement terms.
Insurer profiles with key information are collected in the insurance company catalogue, and you can compare offers in the Comparison section. If an insurer's licence has been revoked, follow the instructions in our article What to do if your insurer's licence is revoked.