LONDON--(BUSINESS WIRE)--A.M. Best has placed under review with negative implications the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Halyk-Kazakhinstrakh, Insurance Subsidiary Company of Halyk Bank of Kazakhstan, JSC (Kazakhinstrakh) (Kazakhstan). These Credit Rating (rating) actions follow the company’s announcement on 25 January 2018 of its shareholder agreement to merge its sister insurer, JSC IC Kazkommerts-Policy (Kazkommerts-Policy), into Kazakhinstrakh. The merger decision follows the 2017 acquisition of JSC Kazkommertsbank, Kazkommerts-Policy’s parent, by JSC Halyk Bank, Kazakhinstrakh’s parent.
The ratings have been placed under review with negative implications as A.M. Best needs to assess the potential for deterioration in the company’s post-merger balance sheet strength and operating performance. Following the merger announcement, and the payment in December 2017 of a large dividend (KZT 9 billion or equivalent to approximately USD 28 billion), there is increased uncertainty regarding the insurer’s capital management strategy.
The merger is subject to regulatory approvals and is expected to complete during 2018. The ratings will remain under review until A.M. Best has completed its evaluation of the impact of the merger on Kazakhinstrakh’s rating fundamentals and the transaction has closed.
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