During the period from October, 12^th till October, 20^th, 2011, the analytical service of RA “Expert-Rating” conducted rating research on financial strength of Private Joint Stock Company “Ukrainian Security Insurance Company” (USREOU code 23734213). At special meeting of Rating Committee on October, 20th, 2011 by results of research it was decided to assign financial strength rating at the level uaА +. Giving so high evaluation of the financial stability of Joint Stock Company “Ukrainian Security Insurance Company” RA Expert Rating relied on the following conclusions of the analytical service of Agency:

1. Market share of JSC Ukrainian Security Insurance Company is estimated by RA Expert Rating at the level of 1%, however the company occupies narrow and specialized niche in the insurance market, which implies continuous guaranteed demand for insurer services. For the last half a year the Company has shown essential growth of business activities, having increased in 2,9 times the gross premiums in H1 2011. According to the Agency, the forecasted volume of total insurer business will constitute UAH 80 m in 2011 that allows JSC Ukrainian Security Insurance Company to enter the top 20 insurers-leaders on business volumes in classic insurance.

2. Within the research RA Expert-rating analyzed diversification of Company business per insurance types, and per client diversification. No unequivocal conclusions could be drawn as regards the level of per type diversification. On the one hand, the share of the largest types of insurance fluctuated at 47-67 % that proves to low level of per type diversification, on the other hand, namely the specialization of the Company allowed it to occupy strong positions in the market. Due to that the demand for insurer services had steadier trends, than for example demand in OSAGO or auto-hull insurance market, the Company having large share of the market in specific segment can be considered as an advantage. The level of insurer per client diversification has been recognized by RA Expert-rating as perfectly high. Following H1 2011 the top largest customer of JSC Ukrainian Security Insurance Company corresponded to 11 % of Company business.

3. Throughout the entire analyzed period JSC Ukrainian Security Insurance Company showed high quality of assets. 31% of all earning assets have been subject to rating. Approximately 92% of fixed incomes assets had ratings above investment grade. 68% of earning assets were not subject to rating. At the same time the Company avoided investments into garbage shares or bonds. A part of earning assets portfolio consisted in investments into liquid real estate. RA Expert Rating assesses the level of reinsurance provision as close to satisfactory. Following H1 2011 more than 60% of premiums corresponded to one reinsurer. At the same time it should be remembered that JSC Ukrainian Security Insurance Company does not work with large risks, and the scale of work of the Company in Ukraine meanwhile is limited by UAH 100 m of total volume of business.

4. According to RA Expert Rating, the Company is overcapitalized. The insurer can allow increasing total liabilities up to the amount of UAH 10 m. Moreover, the Company is controlled by the state: 20 % of insurers’ shares are owned by the Office of State Protection Service under CD MIA of Ukraine in the city of Kiev, 40 % of shares belong to the Department of State Protection Service under CD MIA of Ukraine. When necessary the shareholders can provide an unprecedentedly high level of external support, limited by macroeconomic scale risks only.

In the long term the rating of JSC Ukrainian Security Insurance Company can be raised when the share of the insurance of commercial risks in the portfolio would drop by 10 percentage points at total business growth to UAH 100 m in annual equivalent.

Analytical service of RA Expert-Rating