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. Last Updated: 07/27/2016

State May Cut Stake in Top Insurer

The government may reduce its stake in the country's top insurer, Rosgosstrakh, through either a sale or an additional share issue, a senior Finance Ministry official said Wednesday.

"We will put forward these proposals to the Economic Development and Trade Ministry and the Finance Ministry," said Alexei Savatyugin, who is also the insurer's chairman.

The government owns just over 25 percent of Rosgosstrakh. Russia plans to open up the insurance sector to foreigners, who own only about 4 percent of it. The sector is also vital to President Vladimir Putin's plans to diversify the economy away from oil and gas.

Savatyugin told a news conference that privatizing Rosgosstrakh would require a decision to cross it off the list of so-called "strategic enterprises" whose sale is restricted because of their importance for national security or state interests.

Savatyugin said Rosgosstrakh also needed to boost its capital to comply with insurance sector regulations and to maintain growth rates. The sector is supervised by a unit within the Finance Ministry.

The reduction in the government's stake in Rosgosstrakh will be a side effect of a capital increase through a share issue or a sale "for good money," he said. "The logic at work is the same as during Sberbank's rights issue earlier this year," he said.

Savatyugin said Rosgosstrakh's role in the country's insurance sector was similar to that played by Sberbank in banking. Rosgosstrakh has 2,000 branches and controls one-third of the mandatory car accident insurance market, he said.