2013-08-23 16:33:03 -
A.M. Best Europe – Rating Services Limited has placed under review with negative implications the financial strength rating of B+ (Good ) and issuer credit rating of “bbb-” of Halyk-Life, Life Insurance Subsidiary Company of Halyk Bank of Kazakhstan, JSC (Halyk-Life) (Kazakhstan).
The rating actions reflect the potential loss of premium volume and subsequent impact on Halyk-Life’s business strategy following the recent action taken by the Kazakh government to consolidate all privately-run pension funds into a single state-owned fund. In compliance with regulations relating to the nationalisation of privately-run pension funds, Halyk-Life has suspended sales of pension annuity products, whilst pursuing discussions with the regulator as to the future of its annuity business in Kazakhstan.
Halyk-Life operates within the relatively new domestic
life market. The company’s business profile is supported by its affiliation with the Halyk group, a financial services organisation wholly owned by a leading retail bank, Halyk-Bank. Through Halyk Bank, the company benefits from the provision of pension annuity business via its sister company, Pension Fund of Halyk Bank (PFHB). PFHB previously maintained a 33% share of the Kazakh pension market. The potential loss of new business from Halyk-Life’s pension annuity portfolio, accounting for 65% of gross written premium at year-end 2012, creates uncertainty relating to the company’s prospective business strategy, along with the level of risk-adjusted capitalisation maintained at entity level to support its operation going forward.
The ratings of Halyk-Life will remain under review with negative implications pending a resolution between the regulator and Halyk-Life regarding the sale of pension annuity business. As part of its assessment, A.M. Best will evaluate Halyk-Life’s strategy for expansion within the life market and the impact of its plans on risk-adjusted capitalisation. A.M. Best expects to resolve the under review status during the first quarter of 2014.
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 ..
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