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A.M. Best Downgrades Ratings of B&B Insurance Co., OJSI and Revises Outlook to Negative.

LONDON -- A.M. Best Co. has downgraded the financial strength rating to C (Weak) from C++ (Marginal) and the issuer credit rating to "ccc+" from "b+" of B&B Insurance Co., OJSI (B&B) (Belarus). The outlook for the financial strength rating is stable, and the outlook for the issuer credit rating has been revised to negative from stable.

The ratings reflect the company's weak and deteriorating capitalisation, high operating leverage and poor underwriting results in 2008 and 2009.

B&B's already weak capitalisation has deteriorated due to a loss after tax in 2008 and rapid growth in gross written premium (30%-40% per annum) in recent years. Capitalisation will continue to be negatively impacted if the company's business volumes continue to grow at a similar rate in the future. A mitigating factor is that the company was profitable in 2009, and management expects this to continue in 2010, along with a reduction in the level of growth in gross written premium. If achieved, this could help improve B&B's future capitalisation.

The need to collateralise significant new reinsurance acceptances has led to a sharp increase in external borrowings. Operating leverage now stands at 130% of B&B's capital and surplus. A.M. Best believes that this position is unlikely to improve as the company plans to continue writing these lines in the future.

B&B's underwriting results showed a loss in both 2008 and 2009 as a result of the weakening Belarusian ruble and general deterioration. A.M. Best believes that the company's technical performance in 2010 is likely to remain variable, and the combined ratio is expected to improve to approximately 100%.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit
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Publication:Business Wire
Geographic Code:4EUUK
Date:Jul 16, 2010
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