Kazakh insurance group recovering with 67% growth after restructure, notes Fitch
Oct 18. Post
By Jonathan Swift
Fitch Ratings has assigned Kazakhstan-based non-life insurance group Amanat Insurance a ‘B’ Insurer Financial Strength (IFS) rating and a National IFS ‘BB(kaz)’ rating. The Outlooks are Stable.
It said the ratings take into account the operational challenges faced by Amanat due to the forced restructuring commenced in 2009 and also caused by the unfavourable environment in the Kazakh insurance sector.
“On the other hand, the ratings reflect the insurer’s strong risk-adjusted capital position, largely driven by a dramatic decline of net premiums written in 2009 and expected to be further supported by a capital injection in Q410,” Fitch continued.
“Exit of the minority shareholder and full change in the management team in Q109 resulted in 68% decline of Amanat’s gross written premium in 2009. The reason behind this was significant dependence of the franchise base on the company’s CEO, nominated by the exited minority shareholder.”
Fitch concluded that the combined ratio rose far above 100%, largely driven by the expense ratio and delayed payment of the reinsurance costs for the portfolio written in 2008.
However, Amanat’s return on adjusted equity remained positive in 2009, supported by investment income.
Fitch concluded: “The majority shareholder, which used to have little involvement in the insurer’s operations, declared its interest in the insurance business in 2009, nominated a new team and announced significant capital increase to be completed in 2010 to help the company meet new regulatory capital requirements. The portfolio started to recover in 2010, with GWP growth reaching 67% in 8M10.”
Amanat’s distribution is largely through captive channels and affiliation of leading insurers with banking and industrial groups.