OREANDA-NEWS. May 28, 2009. The League of Insurance Organizations of Ukraine (LIOU) has started preparing different alterations to the Ukrainian Insurance legislation (OJSC Transsiberian Reinsurance Corporation has been the member of LIOU since 2006). In particular, LIOU suggests to soften the requirements, under law “On insurance” of Ukraine and by-laws concerning the minimum international financial strength ratings, which help the Ukrainian Insurers to have their risks covered by foreign reinsurers without additional tax levies. LIOU proposals found support by the State Financial Services and in the nearest future are likely to compose the legislative amendments.  

General conditions of foreign reinsurance are adopted by the Order of the Ukrainian Cabinet of Ministers dated 04.02.2004 No.124, and requirements of the financial strength ratings to nonresident reinsurers are stated in Regulations of the Ukrainian State Financial Services dated 03.12.2004 No.2885. For example, ratings of Standard & Poor's and Fitch Ratings agencies must be not lower than BBB, A.M. Best – B+. Though, Reinsurers from Common Free Market zone, including Russia, may enjoy BB and B ratings correspondingly.

However the on-going financial crisis lowered ratings of many global reinsurers, as well as sovereign ratings. At that the sovereign Ukrainian rating was downgraded to CCC+ by S&P. 

Due to the crisis, western reinsurers rise prices for the reinsurance cover, toughen the underwriting conditions. The Ukrainian insurers have to search for the new ways of covers for their portfolios. Russian market, due to historical and economical community has been the alternative to high-rating, but expensive western services.    

Even in May of 2008, after Ukraine joined WTO, reinsurance from non-WTO countries was prohibited, but Russian reinsurers collected 14.3% of total premium income paid by Ukraine to abroad. Russia is on the third place regarding this indicator after Great Britain and Germany, the authority of which is beyond doubt. At that, with regards to Ukrainian inward reinsurance, Russia has been taking the lead for a long time: 47% in 2006, 28% - 2007.

The interconnection of our markets is confirmed by long-stand cooperation (Transsiberian Re has been working with the Ukrainian companies since early 90s) and the softening of Russian excess to the Ukrainian market will do a good favor to both countries.