S&P Global Ratings on July 27 revised its outlook on Region Investment Co. ZAO and its subsidiary REGION Broker Co. LLC to negative from stable, while affirming the companies' B-/B long- and short-term issuer credit ratings.
The outlook revision reflects S&P's view that the company's strategy of aggressive growth via acquisitions, including the recent purchases of OJSC State Insurance Co. Yugoria, Mkb-Leasing OOO and a Russian non-state pension fund, is weighing on the group's already weak capitalization, making its future performance reliant on successful integration of the purchased entities.
The negative outlook indicates that the rating agency could downgrade Region if its aggressive growth strategy leaves it even less able to withstand a period of stressful conditions. The outlook could be revised to stable if the group manages to successfully integrate its newly acquired units, restore its capital base through retained profits or reduce its risk appetite, bringing its projected risk-adjusted capital ratio over 3.5%, from the currently estimated level of between 2.9% and 3.1%, S&P noted.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found in the sources section.