Rating conclusion

(Translation from Russian)

April 09, 2012 the rating committee of RA «Expert-Rating» has made a decision about assigning the financial stability rating of the insurer PJSC IC «NOVA» at the level uaAA. The insurer with rating uaAA is characterized by a very high financial stability in comparison with other Ukrainian insurers. Assigning a high level of rating, RA «Expert-Rating» was based on the conclusions of the Agency’s analytical service, made according to the results of the insurer’s financial statements for the 12 months of 2011.

Table

Key performance indicators of PJSC IC «NOVA» in 2011

Source: the Company’s data, calculations by RA «Expert-Rating»

1. In the period from 30.12.2010 to 31.12.2011 assets of IC «NOVA» have grown by 0,33%, liabilities have decreased by 5,93% for the same period, shareholders’ equity has increased by 8,41% having reached UAH 42,622 mln. As a result, the shareholders’ equity/liabilities ratio has grown from 77,44% up to 89,25% or by 11,81 p.p. The company’s capitalization has also increased and now it can be characterized as redundant.

2. IC «NOVA» has also maintained a high level of liquidity. Cash on the company’s accounts have amounted to UAH 35,178 mln. on 31.12.2011, while the cash/liabilities ratio has amounted to 82,54% on 31.12.2011, that is slightly higher than the average market indicator. The Agency also notes the growth of the cash/liabilities ratio by 8,08 p.p. from 31.12.2010 to 31.12.2011. The growth of liquid assets in 2011 has amounted to 4,27%, and the decline in liabilities – 5,93%.

3. IC «NOVA» has finished the 2011 year with net profit of UAH 2,952 mln, that is by 32,5% less, than in 2010. It’s important that the financial result from operating activities has shown a reverse tendency: in 2011 it has grown by 165,28% in comparison with the same period of 2010 and has amounted to UAH 11,876 mln. The company’s activity has been profitable, and, as estimated by the Agency, sufficient for a significant additional capitalization of IC «NOVA» if necessary.

4. The reasons for the rise in the operating profitability of IC «NOVA» have become changes related to the increase in profitability of operations in the insurance market. Despite the decrease in gross business of 2011 by 0,92%, the company has managed to decrease the payments by 26% in 2011, comparing to the 2010, the loss ratio has reduced by 12,11 p.p. down to 35,9%. It is indicative that in this situation with the increase in the profitability of operations, the quality of the insurer’s assets has grown, as indicated by the rise in liquid assets.

5. The diversification level of the insurance activity of IC «NOVA» remains high. The insurer has managed not only to keep the profitability level during the recession of activity in the segment of classical insurance, but, on the contrary, to increase the profitability of its operations.

Analytical service of RA «Expert-Rating»

Rating conclusion of IC «NOVA» (english version) - 09.04.2012