2014-03-28 17:55:03 -
A.M. Best has removed from under review with negative implications and affirmed 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 outlook assigned for both ratings is stable.
In August 2013, the ratings of Halyk-Life were placed under review with negative implications following the Kazakh government’s decision to consolidate all privately run pension funds into a single state-owned fund. As a consequence, Halyk-Life suspended sales of pension annuity products, previously provided via its sister company, Pension Fund of Halyk Bank. This line of business accounted for 65% of the Halyk-Life’s gross written premiums (GWP) in 2012.
A.M. Best has received further clarifications as
to the future of pension annuity business in Kazakhstan and has reviewed Halyk-Life’s audited financial statements for the full year 2013. The impacts of the new regulation on Halyk-Life’s business profile as well as the required level of risk-adjusted capitalisation to support any changes in the company’s strategy have been assessed.
According to the schedule approved by the National Bank of Kazakhstan, life insurance companies will be able to continue to write pension annuity business from 27 June 2014, following the consolidation of the assets from private pension funds into the state-owned fund. A.M. Best believes that following the nationalisation of the privately run pension funds, Halyk-Life will be able to retain a large portion of its customers, owing to its strong brand in Kazakhstan and affiliation with its owner, Halyk Savings Bank of Kazakhstan, JSC.
Despite the suspension of pension annuity business in the middle of 2013, Halyk-Life experienced a relatively low decrease of GWP of 6%.
This is largely explained by significant premium collection in the first half of 2013 in line with Halyk-Life’s historically strong growth. A.M.
Best understands that in view of the changed regulation Halyk-Life’s strategy includes the diversification of its business by introducing new endowment and annuity products. However, these products are likely to represent a moderate share in the overall portfolio going forward.
It is anticipated that Halyk-Life’s risk-adjusted capitalisation, as measured by A.M. Best’s capital model, will improve in 2014, as the company expects to finalise an additional capital contribution of KZT 1 billion (USD 5.5 million) during the first half of the year. Therefore A.M. Best believes that Halyk-Life’s risk-adjusted capitalisation will remain supportive of the company’s expansion plans in near to medium term.
There are currently no upward rating pressures. Negative rating actions could occur if there were a significant deterioration in Halyk-Life’s operating performance or risk-adjusted capitalisation. A decline in country risk fundamentals of Kazakhstan or a significant delay in the progress of the pension annuity regulation could also have a negative impact on Halyk-Life’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 ..
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
" title="http://cts.businesswire.com/ct/CT?id=bwnews&sty=20140328005574r1&sid=16929&distro=ftp\"/>" target="_blank" rel="nofollow">cts.businesswire.com/ct/CT?id=bwnews&sty=20140328005574r1&am ..
A.M. BestValeria Ermakova, +(44) 20 7397 0269Associate
Financial Analyst firstname.lastname@example.org
: mailto:email@example.com orDeniese
Imoukhuede, +(44) 20 7397 0277Associate Director, Analytics firstname.lastname@example.org
: mailto:email@example.com orRachelle
Morrow, +(1) 908 439 2200, ext. 5378Senior Manager, Public
: mailto:firstname.lastname@example.org orJim
Peavy, +(1) 908 439 2200, ext. 5644Assistant Vice
President, Public Relations email@example.com