S&P assigns ‘B/kzBB+’ rating to Kazakhstan-based insurance company Tsesna-Garant

May 8. Trend

By E. Kosolapova

S&P assigns 'B/kzBB+' rating to Kazakhstan-based insurance company Tsesna-GarantStandard & Poor’s Ratings Services said on Wednesday that it had assigned its ‘B’ long-term counterparty credit and insurer financial strength ratings and ‘kzBB+’ Kazakhstan national scale rating to Kazakhstan-based Insurance Company Tsesna-Garant JSC. The outlook is stable.

The ratings on Tsesna-Garant reflect Standard & Poor’s view of the company’s weak competitive position based on its short track record, and its weak operating results and financial flexibility. These weaknesses are offset by the insurer’s marginal capitalization, as well as its adequate investment quality and liquidity.

Tsesna-Garant, established in 2008, became 100 percent-owned by Tsesna Bank (B/Stable/B; ‘kzBB+’) in 2009. There is no explicit support from Tsesna Bank factored into our ratings, however, given that we assess the parent’s credit quality at the same level as Tsesna-Garant’s. We consider Tsesna-Garant to be a “moderately strategic” subsidiary to Tsesna Bank under our group methodology.

The stable outlook reflects Standard & Poor’s expectation that Tsesna-Garant will maintain the strength of its financial profile, reflected in marginal capitalization and the adequate quality of investments, despite rapid premium growth.

A positive rating action is unlikely at this stage unless there are upward changes in the parent’s stand-alone credit profile combined with improvements in the company’s business profile evidenced in a sustainable market position.

A negative rating action will likely follow if we lower our rating on the parent. Deterioration of the company’s financial profile, as well as unprofitable or aggressive expansion into new product lines that pressure the company’s competitive position and operating results, could also trigger a negative rating action.