S&P and AM Best have adjusted the credit ratings of Russian insurers due to increased geopolitical and economic risks after the invasion of Ukraine.

S&P says the escalation of tensions, military operations and sanctions against Russia could lead to conditions that “eventually destabilise Russia's economy and financial system”.

The value of the Russian stock market has dropped by more than 40% this year and bond prices have fallen by more than 15%.

“Recent sanctions and possible additional ones could further intensify the volatility in the domestic market and local currency, which in turn could erode insurers’ profitability and capital positions,” S&P said.

S&P lowered the ratings on Sogaz Insurance and Ingosstrakh Insurance to 'BBB-' from 'BBB' and placed the ratings on CreditWatch negative, reflecting the lowering of Russia’s currency sovereign credit rating.

It lowered the ratings on Sberbank Insurance LLC to 'BB+' from 'BBB-' and placed them - along with ratings on VSK Insurance, Energogarant, Lexgarant Insurance, Alfastrakhovanie and Stanpeak - on CreditWatch negative.

The agency says US and EU sanctions limiting access to the global financial markets will likely constrain Russia's long-term growth prospects and potentially make the country less attractive to investors in the medium-to-long term.

AM Best has placed Credit Ratings under review, with negative implications, for GIC Perestrakhovanie, Ingosstrakh, Sogaz and Russian Reinsurance Company.