AM Best places Russia on highest risk level
Move follows imposition of sanctions that have resulted in a ‘deeply challenging and unpredictable operating environment for insurers’
AM Best has downgraded Russia to CRT-5, its worst country-risk tier, from CRT-4, citing the significantly heightened geopolitical, economic and financial system risk in the country amid the ongoing military incursion into Ukraine.
The rating agency said the sanctions the US and other members of Nato have imposed on Russia in the wake of the invasion have targeted the financial system and resulted in a “deeply challenging and unpredictable operating environment for insurers”.
Liquidity risks have increased owing to the volatility in capital markets and cross-border payments are likely to be negatively affected by the sanctions and other capital controls, it said.
AM Best’s country-risk rating system assesses the country-specific factors that could affect an insurer’s ability to meet its financial obligations, ranging from the lowest-risk, stable environment of CRT-1 countries to the highest-risk, most challenging environment of CRT-5 countries.
The company incorporates country risk into its analysis of balance sheet strength, operating performance and the business profile for all rating units.