Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive-Russia's state-owned RNRC to reinsure Russian oil shipments, sources say

Commodities Jun 10, 2022 09:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: The logo of Russian state shipping company Sovcomflot is seen on the multifunctional icebreaking standby vessel "Yevgeny Primakov" moored in central St. Petersburg, Russia February 3, 2018. REUTERS/Anton Vaganov/File Photo 2/2

By Jonathan Saul

LONDON (Reuters) - State-controlled Russian National Reinsurance Company (RNRC) is now the main reinsurer of Russian ships, including Sovcomflot's fleet, after Western insurance firms withdrew cover for Russian shipowners, three people familiar with the matter told Reuters.

Insurance is essential for maritime transport, particularly oil cargoes that require the highest safety standards due to the risk of spills and shipping flammable material on the high seas.

Before Western sanctions were imposed on Russia over its invasion of Ukraine, which Moscow calls a "special military operation", insuring such cargoes relied on reinsurance from an international pool of companies offering broad coverage.

Western insurers withdrew cover from state-run Sovcomflot (SCF) when Russia's biggest shipping group was hit by sanctions, but Western insurance sources said the Russian replacement cover would likely be enough to keep Russian vessels sailing.

Russian Security Council Deputy Chairman Dmitry Medvedev said this week that state guarantees would be offered as insurance for moving Russian goods, without giving details.

The sources, who declined to be identified due to the sensitivity of the issue, said Russian central bank-controlled RNRC was now the main company providing state guarantees to Russian insurance firms that offered cover such as Ingosstrakh, which insures Russian tankers, including SCF's fleet.

RNRC, Ingosstrakh and Sovcomflot did not respond to Reuters requests for comments.

Russia's central bank said in March it had raised RNRC's capitalisation to 300 billion roubles from 71 billion roubles and hiked its guaranteed capital to 750 billion roubles so the firm had adequate resources to provide reinsurance.

"The increase in RNRC authorised capital will give Russian insurers wider opportunities to reinsure risks inside Russia, build additional reinsurance capacities, and manage new sanctions risk," it said in a report.

INSURANCE PROTECTION

Ships are commercially required to have protection and indemnity (P&I) insurance, which covers third-party liability claims including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.

According to Ingosstrakh's website, the company offers P&I reinsurance of up to $1 billion.

An equal amount was guaranteed by Japan and India for Iranian shipments made in 2012, a period when Iran was under Western sanctions and shut out of the global insurance market.

Western reinsurers typically have higher capital allocations with allotments for different types of cover such as marine insurance, which provides the full range of protection for ships, Western insurance sources said.

"I imagine this capital (of RNRC) is not purely marine and so could be burned through really quickly," one Western insurance industry source said.

The reinsurance pooling programme of the International Group of P&I insurers, which cover P&I insurance for about 90% of ocean going ships, is capped at a maximum of $3.1 billion for each incident.

Two tanker market sources said RNRC's capitalisation would allow it to act as a reinsurer for Russian ships on the international market without involving Western companies.

One source said similar insurance guarantees were provided by the Iranian authorities when Western insurance companies were unable to insure tankers with Iranian oil amid sanctions.

Russian guarantees were likely to satisfy countries still buying Russian oil, another of the Western insurance industry sources said, after the United States banned Russian oil imports and the European Union agreed to gradually introduce a ban.

Most Russian oil exports, in particular those on Sovcomflot tankers, are bound for Asian ports, mainly India and China, neither of which have imposed a ban on working with Sovcomflot.

Indian authorities have already accredited Ingosstrakh as an insurance company for shipping oil, which means vessels the company insures can enter Indian ports.

Exclusive-Russia's state-owned RNRC to reinsure Russian oil shipments, sources say
 

Related Articles

Oil retreats on chance of Iran supply boost
Oil retreats on chance of Iran supply boost By Reuters - Aug 08, 2022 4

MELBOURNE (Reuters) - Oil prices dipped in early trade on Tuesday on the latest progress in last-ditch talks to revive the 2015 Iran nuclear accord, which would clear the way to...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email