2013-02-28 15:34:22 -

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Halyk-Kazakhinstrakh, Insurance Subsidiary Company of Halyk Bank of Kazakhstan, JSC (Kazakhinstrakh) (Kazakhstan). The outlook for both ratings is stable.

The ratings of Kazakhinstrakh reflect its excellent risk-adjusted capitalisation, good competitive position in the Kazakhstan market and consistently positive operating performance. The ratings also consider the company’s high country risk exposure through its operation in Kazakhstan.

Kazakhinstrakh’s risk-adjusted capitalisation is expected to remain strong, supported by good internal capital generation. The company’s risk-adjusted capital position is supported by its reinsurance programme, which is placed with reinsurers with good credit quality. In 2012, 92% of outstanding technical provisions where expected from

reinsurers rated A- or higher. Regulatory changes in 2012, restricting the use of foreign reinsurers by local Kazakh companies, are not expected to significantly affect the credit quality of Kazakhinstrakh’s outward reinsurance business going forward.

As the market’s third-largest insurer, Kazakhinstrakh maintains a good competitive position. The company maintains a well-diversified business portfolio, which is mainly focused on retail business. Gross written premiums are expected to fall by approximately 30% in 2012, mainly due to the absence of premium income derived from a large oil and gas contract written in 2011.

Kazakhinstrakh’s operating performance remains strong, consistently supported by positive technical results and good underwriting earnings.

A pre-tax profit higher than the KZT 2.7 billion (USD 13 million) produced in 2011 is expected in 2012. Results are expected to benefit from higher yields on Kazakhinstrakh’s fixed income portfolio. The level of investments in sub-investment grade securities represented 34% of total fixed income investments in 2012 (2011: 18%).

No upward rating action is expected in the near term. Negative rating actions could occur if a decline in Kazakhinstrakh’s financial profile were to result in a deterioration of risk-adjusted capitalisation to a level below A.M. Best’s expectations. A decline in country risk fundamentals could also drive negative pressure on the company’s ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.

Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”, “Evaluating Country Risk”; “Rating Members of Insurance Groups”; “Catastrophe Analysis in A.M. Best Ratings”; and “Understanding BCAR for Property/Casualty Insurers”.

Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : www.ambest.com/ratings/methodology .



In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M.

Best Europe - Rating Services Limited Supplementary Disclosure : www.ambest.co.uk/AMBERSDisclosure.pdf .


A.M. Best Europe – Rating Services Limited is a subsidiary of A.M.

Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

For more information, visit www.ambest.com : www.ambest.com/ .

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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A.M. Best Company, Inc.Arianna Brina, +(44) 207 397 0330Associate

Financial Analyst arianna.brina@ambest.com : mailto:arianna.brina@ambest.com orDeniese

Imoukhuede, +(44) 207 397 0277Senior Financial Analyst deniese.imoukhuede@ambest.com : mailto:deniese.imoukhuede@ambest.com orRachelle

Morrow, +(1) 908-439-2200, ext. 5378Senior Manager, Public
Relations rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com orJim

Peavy, +(1) 908-439-2200, ext. 5644Assistant Vice
President, Public Relations james.peavy@ambest.com : mailto:james.peavy@ambest.com