Page 72 - RUSRptSept18

Ukrainian group DCH Alexander Yaroslavsky. However, Yaroslavsky is now more interested in buying Ukrainian Sberbank, according to Kommersant. VEB's losses from the closure of Prominvestbank may amount to about RUB13bn ($192mn), according to Expert RA cited by the paper.
Russian insurer cuts premiums but returns to profit Once Russia’s largest insurer, Rosgosstrakh has been losing money hand over fist as it tries to get out of the obligatory insuring business. The amount Rosgosstrakh earned from premiums for the first half of this year decreased by 44.5% to RUB28.1bn against RUB50.6bn a year earlier, the company reported this month, which payments to the insurer fell 2.4-fold to RUB22bn. The results are part of a restructuring where Rosgosstrakh is reducing the unprofitable OSAGO contracts, or obligatory motor insurance policies. In April, Rosgosstrakh said it planned to cut its exposure to the OSAGO car insurance market two-fold by 2021, bringing its share in total premiums to 15%. In its place the company plans to "aggressively expand" in the life and medical insurance markets and establish its own life insurance branch, the daily said, citing an unpublished Rosgostrakh strategy. While the company is reducing number of policies it writes it still has to pay out on the old ones. Reducing the pool of premiums from policies available to fund claims amplifies losses until the old policies eventually expire. Rosgosstrakh reduced its compulsory motor third party liability (MTPL) fees that have fallen to RUB9.3bn against RUB22.4bn that it took in a year earlier. Rosgosstrakh launched the drive to curtail its OSAGO business last year. In the forth quarter of 2017 its share of this market was about 10%, compared to almost 40% in 2015. Rosgosstrakh's strategy envisages only 15% of fees coming from compulsory motor MTPL insurance by 2021. In the first half of the year, Rosgosstrakh earned a net profit of RUB2.4bn for the first time in three years, against RUB15.6bn loss a year earlier. The company has made the OSAGO a profitable business again, but its profitability is low, the insurer said in a report. The current share of OSAGO in its portfolio is 32% down from 36% at the end of 2017 while voluntary types of insurance increased by 10% and now account for half of the portfolio, the company says.
Mobile TeleSystems (MTS) may purchase remaining Sistema’s stake in MTS bank – positive for Sistema, neutral/slightly negative for MTS. The news comes from Kommersant sources saying that the deal is likely, with one claiming that the deal process has virtually started. MTS acquired 28.6% MTS Bank from Sistema in July for RUB8.3bn (implies 1.4 P/BV valuation), increasing its stake to 55.2%, while Sistema kept 43.2% and 1.6% was hold by minority holders. At that time MTS did not rule out that it may further increase itsstakeinthebankinthefuture. Butanalystssayitmakesl ittlesensefor MTS to acquire Sistema’s remaining stake in MTS bank, especially so soon after it got control in the bank (in July). The ultimate impact for the carrier would depend on the deal price. The July deal valuation would imply RUB12bn spend for MTS. For Sistema the deal may strengthen its cash position at the corporate level.
Russia's largest micro-finance company Domashnye Dengi (Home Money) is under threat of going bust after the state Deposit Insurance Agency (DIA) started bankruptcy proceedings against DD as well as personally against its head Evgeny Bernshtam in Moscow Arbitrage Court, Vedomosti daily said on August 27. Reportedly the Russian Trust Bank, controlled by DIA, sees no other way of resolving the RUB10mn debt of Finotdel micro-financing company, part of the DD group. Previously DD was said to be bringing together a pool of creditors to restructure its debt and relaunch its business . In April the company technically defaulted on a bonded loan offer of RUB840mn ($12.5mn) on RUB1.2b bond issue maturing in 2022.
72 RUSSIA Country Report September 2018 www.intellinews.com