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Renaissance Insurance announces intention to float on Moscow Exchange

NEITHER THIS ANNOUNCEMENT NOR THE INFORMATION CONTAINED HEREIN IS FOR PUBLICATION, DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, INTO AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES OR TO ANY PERSON IN ANY OF THOSE JURISDICTIONS OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE LAWS OF SUCH JURISDICTION.

Renaissance Insurance Group JSC (“Renaissance Insurance” or the “Company”, and together with its consolidated subsidiaries, the “Group”), a Russian diversified independent insurance company, today announces its intention to conduct an initial public offering (the “Offering”) of ordinary shares (the “Ordinary Shares”) and to list on Moscow Exchange. The Offering is expected to comprise an offering of the Ordinary Shares (i) in the Russian Federation, (ii) otherwise outside the United States in reliance on Regulation S (“Regulation S”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and (iii) within the United States to certain qualified institutional buyers (“QIBs”) as defined in, and in reliance on, Rule 144A (“Rule 144A”) under the Securities Act.

The Offering is expected to consist of (i) a primary offering of new Ordinary Shares (the “Primary Shares”) to raise up to RUB 21 billion and (ii) a secondary offering of existing Ordinary Shares (the “Secondary Shares”) by certain shareholders of the Company (the “Selling Shareholders”). Proceeds from the primary component of the Offering will be used to accelerate the Group’s development by financing organic growth, investments in further digital initiatives, potential value-accretive acquisitions and the possible repurchase of shares following the results of stabilisation in connection with the Offering.

Boris Jordan, President and Chairman of the Board of Directors of Renaissance Insurance, said:

“Today’s announcement represents a landmark for Renaissance Insurance and a watershed moment in the history of the Russian insurance market. Becoming the first publicly-listed Russian insurer would be entirely fitting for a company that has always sought to be ahead of the curve ever since we established it almost three decades ago. We were the first in our industry to recognise the potential of digital transformation and have disrupted the market with a business model that is high-tech, highly efficient and highly profitable. Digitalisation has been the core driver behind Renaissance Insurance delivering faster and more profitable growth than the overall market for the past several years, including during the coronavirus pandemic.

“Today, our business is highly digitalised. We use the latest technologies and tools such as AI-guided decision-making and big data-powered scoring across the company, enabling us to offer smart online tariffs, manage our risks flexibly and in real time, and ensure claims can be settled in minutes. We also have a unique API that can integrate our insurance products into the ecosystems of new bank and marketplace partners in a matter of hours, compared to other solutions that take more than a month, enabling us to expand our distribution capabilities faster and more efficiently. Our business model is incredibly flexible and scalable at minimum additional cost. This means we can enter new fast-growing segments such as shared mobility insurance as well as new geographies in Russia wherever we see opportunities, and it positions us to act as an efficient consolidator in the market through value-accretive acquisitions.

“Throughout our digital transformation we have stayed faithful to our core belief in putting the customer first. In doing so, we have set new standards for service quality in our market. The customer journey – from onboarding to claims settlement – can be completed entirely online and in a fraction of the time that the same processes would take with traditional insurers, with no need to visit an office. By making insurance accessible and easy to understand for our more than 4 million customers, it is no exaggeration to say that in doing this we have fundamentally changed popular perceptions of insurance in Russia.

“Our highly experienced management team has an outstanding track record of growth and profitability, and I would like to thank them for their shared vision and commitment. Today, Renaissance Insurance is perfectly positioned to capitalise on the rapid growth of the Russian insurance market, thanks to the strategic advantages created by our digital business model, leading market positions and ability to capitalise on new opportunities rapidly and efficiently. I am confident that we have many more years of growth ahead of us and I look forward to taking the Renaissance Insurance story to the global investment community.”

Expected Offering highlights

• The Offering is expected to consist of an offering by the Company of Primary Shares and an offering of Secondary Shares by the Selling Shareholders. The Selling Shareholders are expected to comprise (i) Sputnik Management Services Limited and its affiliate Holding Renaissance Insurance LLC (whose main beneficial owners are Boris Alexis Jordan, Mary Louise Ferrier, Dmitry Bakatin and Sergei Riabtsov), (ii) Notivia Ltd (beneficially owned by Baring Vostok), (iii) Laypine Ltd (beneficially owned by Alexander Abramov), (iv) Bladeglow Limited (beneficially owned by Alexander Frolov), and (v) Andrey Gorodilov.
• The primary proceeds of the Offering are expected to amount to up to RUB 21 billion. The proceeds from the primary offering will be used to finance organic growth, digital investments, inorganic business development and potential repurchase of shares following the results of stabilisation activities in connection with the Offering.
• Proceeds to be used for potential stabilisation in connection with the Offering shall comprise 15% of the total Offering size, split pro rata between primary and secondary proceeds.
• The Offering is expected to comprise an offering of the Ordinary Shares (i) in the Russian Federation, (ii) otherwise outside the United States in reliance on Regulation S under the Securities Act, and (iii) within the United States to certain QIBs as defined in, and in reliance on, Rule 144A under the Securities Act.
• The Company and pre-IPO shareholders are expected to be subject to customary lock-up arrangements.
• The Ordinary Shares are expected to be admitted to Level 1 of the List of Securities Admitted to Trading on Moscow Exchange. Prior to this Offering, there has been no public market for the Ordinary Shares.
• Credit Suisse, J.P. Morgan and VTB Capital are acting as Joint Global Coordinators and Joint Bookrunners. BCS Global Markets, Renaissance Capital, Sberbank and Tinkoff are acting as Joint Bookrunners.
• If and when the anticipated Offering is launched, any additional details will be disclosed in the offering memorandum published by the Company, which will be made available on the Company’s website.

Renaissance Insurance highlights

• Digital disruptor and pioneer in the Russian insurance market. Renaissance Insurance has successfully pioneered digital innovations that differentiate it from competitors and drive organic growth. Digitalisation runs through the Group’s entire value chain from distribution (direct online and indirect channels, as well as partnerships and digitalisation of traditional channels), underwriting and claims handling, to back office and operational efficiency. All of the Group’s initiatives and their successful implementations are supported by an agile organisational structure and an entrepreneurial culture that are quick to adapt and deliver. The Group’s innovative digital products include the Budu app, the gateway to the Group’s Digital Health ecosystem, which is designed to capitalise on the high growth potential that the Group sees in the Russian health services market and opportunities for offering B2C and B2B insurance and non-insurance services.
• Leading independent Russian insurer across life and non-life segments. The Group is a market leader in life insurance and the fourth largest non-life insurance company among the independent (non-captive, non-state) insurance players in Russia, based on gross written premiums (GWP) for the years ended 31 December 2020 and 2019. In 2020, the Group had 11% market share by total GWP in the life segment, more than double that of the second largest independent life insurer in Russia. In non-life insurance, the Group had a 3.4% market share by total GWP during the same period. Based on total GWP, the Group was the eighth largest insurance company in Russia in 2020. Non-Life GWP represented 45% and Life GWP represented 55% of the Group’s total GWP for the year ended 31 December 2020.
• Superior growth and substantial potential of Russian insurance market. The Russian insurance market has grown faster than the global average, with a CAGR for GWP of 11% between 2010 and 2020. Sector GWP reached RUB 1,537 billion in 2020, approximately three times the level of 2010, according to the Central Bank of Russia (CBR) data. Between 2010 and 2020, the more mature non-life insurance sector demonstrated attractive growth with a CAGR of 8%, while the emerging life insurance sector grew tremendously with a CAGR of 34%. At the same time, the market remains significantly underpenetrated compared to other EMEA markets, indicating further fundamental potential for accelerated expansion. According to KPMG, the Russian insurance market is expected to expand at a CAGR of 11% between 2020 and 2024, with GWP reaching RUB 2.3 trillion.
• Robust financial performance, with faster growth and superior profitability compared to peers. Renaissance Insurance achieved a compound annual growth rate (CAGR) of 17% for GWP from 2017 to 2020, almost double the annual CAGR for GWP (9%) of the other top-10 insurance players, according to the Company and CBR data. The recent growth is in line with the Group’s long-term trends: the Group grew its GWP by 6.5x between 2010 and 2020, from RUB 12.8 billion(1) to RUB 82.8 billion, primarily driven by organic expansion and value accretive M&A transactions. This attractive growth profile has been accompanied by high profitability. The Group’s return on tangible equity (RoATE) for the years ended 31 December 2020 and 31 December 2019 reached 29% on average, significantly higher than the 19% on average achieved by the other top-10 players(2) for the same period, based on companies’ IFRS financial statements. Net profit grew at a CAGR of 18% from approximately RUB 3.4 billion in 2018 to approximately RUB 4.7 billion in 2020. Under its dividend policy, the Company aims to pay out dividends in the amount of at least 50% of consolidated net profit on an annual basis. Decisions on the recommended dividend amount will be made subject to the Group’s investment needs in terms of business development (including M&A), the achievement of key strategic goals and compliance with capital adequacy and other regulatory requirements.
• Experienced management team with a strong leadership track record supported by highly regarded founder and entrepreneurial long-term shareholders. The Renaissance Insurance management team has many years of successful experience at Russian financial and non-financial companies. Key members of the team have worked at the Group for more than 10 years. Renaissance Insurance CEO Yulia Gadliba has been voted one of Russia’s top women CEOs by Forbes Russia for the past three years. Renaissance Life CEO Oleg Kiselev has been with the Company since its foundation and has been a key player in the development of the Russian life insurance market. The Company was founded by Boris Jordan, a US-Russian businessman and entrepreneur who has built successful businesses in the US, Europe and Russia (and has taken US and European businesses public). In addition to Holding Renaissance Insurance LLC (52.12%), whose main beneficial owners are Boris Alexis Jordan, Mary Louise Ferrier, Dmitry Bakatin and Sergei Riabtsov, the Group’s shareholders include Notivia Ltd (12.08%) beneficially owned by Baring Vostok, Centimus Investments (9.99%) beneficially owned by Roman Abramovich, Laypine Ltd (9.55%) beneficially owned by Alexander Abramov, Bladeglow Limited (4.77%) beneficially owned by Alexander Frolov, Andrey Gorodilov (4.33%) and Spetsinvestservis LLC (7.16%) co-owned by Sputnik Group Ltd. and its partners (which is in the process of transferring its stake in Renaissance Insurance to Sputnik Management Services Limited), all of whom recognise the substantial potential of the Russian insurance market.

Renaissance Insurance financial highlights

(RUB bln)  Year ended 31 December
2020    2019     2018
Gross written premium 82,8     71,7     70,3
Net premium earned 80,5     69,3     68,2
Net profit   4,7       4,1       3,4
Total equity 30,2    25,6      21,6
Selected Key Performance Indicators
Administrative Cost Ratio(3) 8,5%    9,4%    9,3%
Net Profit Ratio(4) 5,7%    5,8%    4,8%
Return on Tangible Equity(5) 25,9%  31,5%  34,8%

In 1H 2021, GWP reached RUB 47.7 billion, an increase of 38% year-on-year; non-life GWP rose by 23% and life GWP grew by 53% year-on-year during the first six months of 2021. The GWP increases for both business lines during 1H 2021 were faster than the overall growth of their respective market segments during the same period.

Russian insurance sector segment overview

Key segments in the non-life insurance sector are:

• Motor insurance is the largest insurance group of non-life products and one of the pioneer products in the Russian insurance market. The product offering consists of two main insurance products: motor own damage (MOD) and compulsory third-party liability (CMTPL).
• Health insurance consists of two products, voluntary medical insurance (VMI, both corporate and individual) and travel insurance, which are different by nature, but are reported jointly by the CBR under health insurance.
• Accident insurance, primarily general accident insurance, with an insignificant share of travel, passengers’, patients’ and employees’ accident insurance.
• Property insurance, consisting of corporate and individual property insurance.

Life insurance includes the following main groups of products:

• Savings insurance, which includes endowment life insurance, combining long-term capital accumulation and insurance coverage (death, disability, critical illness); and investment life insurance, which is a single premium savings product with a significant investment component combined with a guarantee of a premium refund upon maturity and risk coverage;
• Credit life insurance, which covers the debt of a borrower in the event of the policyholder’s death, permanent and/or temporary disability, sickness, unemployment, etc.
• Other life insurance products, such as risk insurance, for instance, formed less than 5% of the life insurance GWP in 2020.


For more information please contact:
Renaissance Insurance PR: pr@renins.com
Renaissance Insurance IR: ir@renins.com

EM (communications advisor to Renaissance Insurance Group)
Daria Khilenkova/Samuel VanDerlip
khilenkova@em-comms.com/ vanderlip@em-comms.com
+7 916 805 4926/ +44 7554 993 032

_______________________________

(1)Calculated as a sum of GWP of Renaissance Insurance and Renaissance Life on a stand-alone basis.
(2)Excluding Sberbank Insurance and VTB-SOGAZ, the largest banking group captive player and a company with different business structure.
(3)Administrative Cost Ratio is calculated as administrative expenses divided by gross written premiums.
(4)Net Profit Ratio is calculated as net profit divided by gross written premiums.

(5)Return on Tangible Equity is calculated as the sum of net profit for the last 12 months adjusted for amortisation of value of business in force divided by the average total equity adjusted for goodwill plus intangible assets plus value of business in force for the specified period.

IMPORTANT NOTICE

This press release is an advertisement and not a prospectus and does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, any securities of Renaissance Insurance Group Joint Stock Company (the “Company” and, the “Securities”, as applicable) or rights to subscribe for the Securities to any person in Australia, Canada, Japan, the United States or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the “Securities Act”) or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain exceptions, the Securities may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The offer and sale of the Securities have not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada or Japan. There will be no public offer of the Securities in the United States.

This press release is being distributed to and directed at persons in member states of the European Economic Area (“EEA”) who are “qualified investors” within the meaning of Article 2(e) of Regulation (EU) 2017/1129 and amendments thereto (the “Prospectus Regulation”) (“Qualified Investors”).

In addition, in the United Kingdom, this press release is being distributed to and is directed only at persons who are “qualified investors”, within the meaning of Article 2(e) of the EU Prospectus Regulation as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal Act) 2018 who are (i) persons who have professional experience in matters relating to investments who fall within the definition of “investment professionals” as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or (iii) other persons to whom an invitation or inducement to engage in investment activity (within the meaning of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “Relevant Persons”).

This communication does not constitute an offer of the securities referred to herein to the public in the United Kingdom and investment or investment activity, or controlled investment or controlled activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons in the United Kingdom and Qualified Investors in any member state of the EEA. No person that is not a Relevant Person should or Qualified Investor may act or rely on this press release or any of its contents.

Solely for the purposes of the product governance requirements contained within (a) Regulation (EU) 600/2014 as it forms part of domestic law in the United Kingdom by virtue of the EUWA ("U.K. MiFIR"); and (b) the FCA Handbook Product Intervention and Product Governance Sourcebook, (together, the "U.K. MiFIR Product Governance Rules") and/or Article 9(8) of Commission Delegated Directive 2017/593 (the “Delegated Directive”) regarding the responsibilities of Manufacturers under the Product Governance Requirements contained within: (a) Directive 2014/65/EU on markets in financial instruments as amended (“MiFID II”); (b) Articles 9 and 10 of the Delegated Directive; and (c) the local implementing measures (the “MiFID II Product Governance Requirements”), the Securities the subject of the Offering have been subject to a product approval process, which has determined that such Securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in the FCA Handbook Conduct of Business Sourcebook; and (ii) eligible for distribution through all permitted distribution channels (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, “distributors” (for the purposes of the UK Product Governance Requirements and/or the MiFID II Product Governance Requirements, in each case to the extent applicable) should note that: the price of the Securities may decline and investors could lose all or part of their investment; the Securities offer no guaranteed income and no capital protection; and an investment in the Securities is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offering. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Credit Suisse International, J.P. Morgan Securities plc, VTB Capital plc, BCS Prime Brokerage Limited, Renaissance Securities (Cyprus) Limited, Sberbank CIB (UK) Limited will only procure investors who meet the criteria of professional clients and eligible counterparties. Each distributor is responsible for undertaking its own target market assessment in respect of the Securities and determining appropriate distribution channels.

These materials do not contain or constitute an offer, or an invitation to make offers, sell, purchase, exchange or transfer any Securities in the Russian Federation, and do not constitute an advertisement of any Securities in the Russian Federation. This communication does not constitute or form part of individual investment advice, investment consulting or personal recommendation (within the meaning of the federal legislation of the Russian Federation (including, without limitation, Federal Law dated April 22, 1996 No. 39-FZ “On the Securities Market”, as amended)).

None of Credit Suisse International, J.P. Morgan Securities plc, VTB Capital plc, BCS Prime Brokerage Limited, Renaissance Securities (Cyprus) Limited, JSC “Sberbank CIB”, Sberbank CIB (UK) Limited or Tinkoff Bank (collectively, the “Banks”) or the expected Selling Shareholders nor any of their respective affiliates, directors, officers, employees, advisers, agents or any other person, accepts any responsibility or liability whatsoever for the contents of, or makes any representations or warranties, express or implied, as to the accuracy, fairness or completeness of the information presented or contained in this press release (or whether any information has been omitted from this press release) or any other information relating to the Company, its subsidiaries and their associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this press release or its contents or otherwise arising in connection therewith. Accordingly, each of the Banks, the expected Selling Shareholders and their respective affiliates, directors, officers, employees, advisers, agents and any other person acting on any of their behalf expressly disclaims, to the fullest extent possible, any and all liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of this press release, whether in tort, contract or otherwise which they might otherwise have in respect of this press release or its contents or otherwise arising in connection therewith.

Each Bank is acting exclusively for the Company and no one else in connection with the matters referred to in this press release, and will not regard any other person as their respective clients in relation to the matters referred to in this press release and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for providing advice in relation to the matters referred to in this press release, the contents of this press release or any transaction, arrangement or other matter referred to herein.

Certain statements in this communication are not historical facts and are “forward looking” within the meaning of Section 27A of the Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, financial position and future operations and development, our business strategy and the trends we anticipate in the industries and the political and legal environment in which we operate and any other information that is not historical information. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward looking statements. We do not intend and we do not assume any obligation to update any forward looking statement contained herein.