2014-03-13 17:36:04 -
A.M. Best 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 remains stable.
The ratings of Kazakhinstrakh continue to reflect its excellent risk-adjusted capitalisation, consistently positive operating performance and good competitive position in the Kazakh insurance market.
Kazakhinstrakh’s risk-adjusted capitalisation is expected to remain strong, supported by good internal capital generation, as demonstrated by a five-year average return on capital and surplus of 15%.
Based on national accounting standards, Kazakhinstrakh reported a pre-tax profit of KZT 3.6 billion in 2013 (2012: KZT 3.2 billion), underpinned by an excellent combined ratio of 85% and solid investment earnings from its portfolio
of predominantly fixed income securities.
As the market’s third-largest insurer, Kazakhinstrakh maintains a good competitive position, supported by its access to a wide distribution channel throughout Kazakhstan. Additionally, the company’s affiliation with its owner, Halyk Savings Bank of Kazakhstan JSC, allows Kazakhinstrakh to take advantage of its well-spread branch network and to capitalise on cross-selling opportunities. In 2013, Kazakhinstrakh’s gross written premiums rose by 38% to KZT 24 billion, due to the renewal of a large offshore oil fronting contract.
A negative rating factor is the company’s high investment risk profile.
Kazakhinstrakh continues to be exposed to sub-investment grade securities, with these investments accounting for 76% of its fixed income portfolio.
Upwards rating action could occur if Kazakhinstrakh demonstrates the successful implementation of its business strategies through growth in its earnings profile, whilst maintaining risk-adjusted capitalisation at a strong level. Additionally, the company would need to evolve its risk management capabilities to support its expanding risk profile. These fundamentals would be assessed over a longer-term period.
Negative rating actions could occur if a decline in Kazakhinstrakh’s financial profile, particularly due to deterioration in its performance or quality of investments, were to result in the erosion of risk-adjusted capitalisation to a level below A.M. Best’s expectations.
A decline in country risk fundamentals of Kazakhstan could also put 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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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 : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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