Financial Markets: Increasing Complexity, Maintaining Stability

3–5 July 2019, ST. PETERSBURG

    Vladimir Chistyukhin, the Deputy Governor of the Bank of Russia, announced at the International Financial Congress that the Bank of Russia will make adjustments to the original business plan for the National Reinsurance Company (NRC).

    “The business plan that was initially presented needs to be amended,” — he commented.

    According to Mr. Chistyukhin, the bill on the NRC adopted by the State Duma is different from the original draft. In particular, the new law prescribes the NRC to reinsure potential utility accidents. Mr. Chistyukhin emphasized: “It was not part of the original business plan. And there are other changes of procedural nature that were added later”.   

    It was previously announced that the State Duma passed the bill on the National Reinsurance Company that provided for the NRC sharing 10% of its risks with private reinsurers with only a number of exceptions.

    The idea of creating a state reinsurance company surfaced after sanctions were applied to several Russian companies and facilities. Russian insurance companies are unable to reinsure their risks within the country due to insufficient local financial capacity, while foreign reinsurers opted to for risk avoidance.

    The Ministry of Finance expects the NRC to become the backbone company, dominating its market. The National Reinsurance Company is estimated to accumulate around 30% of total reinsurance premium in the country.