OREANDA-NEWS. Fitch Ratings has affirmed ACE Insurance Company CJSC's (Russia) (ACE Russia) Insurer Financial Strength (IFS) rating at 'BBB' with Negative Outlook. Fitch has also affirmed ACE Russia's National IFS rating at 'AAA(rus)' with Stable Outlook.

The rating reflects Fitch's expectation that the parent company, ACE Group (ACE), a global insurance and reinsurance group, would be willing and able to provide capital support to ACE Russia if needed. The ultimate group parent is ACE Limited (Long-Term IDR AA-/Stable). ACE Russia has received capital support from the group as and when required. It also benefits from group support and close monitoring in all key areas, including underwriting, reinsurance, claims, actuarial, investment and IT.

However, the rating of ACE Russia is constrained by Russia's local currency sovereign rating (BBB/Negative), and the Negative Outlook on ACE Russia's ratings mirrors that on the sovereign rating. This is due to the small size of the insurer relative to the group and support from the parent being "informal" rather than through a formal agreement. Fitch believes the insurer will not increase its scale of operations relative to ACE at least in the medium term. Fitch continues to view ACE Russia as "Important" to ACE under its group rating methodology.

Fitch considers ACE Russia's risk-adjusted capital as very strong and more than supportive of the current rating. Although capital is somewhat high in relation to ACE Russia's net premium volume and asset risk, it is maintained at the entity for regulatory compliance. Fitch expects the group to continue to extend capital support to ACE Russia as and when required.

RATING SENSITIVITIES
A downgrade of Russia's Long-term local currency IDR is likely to lead to a corresponding downgrade of ACE Russia's IFS rating. Conversely, revision of the Outlook on Russia's Long-term local currency IDR to Stable could trigger a similar rating action on ACE Russia.

If ACE Russia maintains sustainable and profitable growth and achieves a more material scale relative to ACE Group, the IFS rating could be upgraded. However, Fitch does not expect this in the near or medium term.