The rating reflects RNRC's 100% ownership by the Central Bank of Russia, its strong risk-adjusted capital position, as well as the weak underwriting profitability earned on an immature portfolio and high concentration of investment assets in government bonds.
From a capital adequacy perspective, Fitch considers that RNRC is strongly capitalised.
RNRC's financial performance was far below expectations in 2017 with net profit of RUB89 million and ROE of 0.4% versus the expected RUB2.8 billion and 12%, respectively.
Government bonds accounted for 91% of RNRC's investment portfolio at end-2017.
RNRC was founded in August 2016 to increase the reinsurance capacity of the local sector and offer coverage to the local risks falling under sanctions.