Best’s Special Report: Kazakhstan’s Insurance Market – Rating Considerations

LONDON--()--In the three decades since the demonopolisation of the local insurance market, Kazakhstan’s insurance industry has developed rapidly, fuelled by the country’s rising economy and increased consumer spending, as well as regulatory measures, such as the introduction of compulsory lines of business, and tax incentives, according to A.M. Best.

A new Best’s Special Report, “Kazakhstan’s Insurance Market – Rating Considerations,” states that the evolution of the insurance industry has also been supported by the introduction of regulation aimed at containing the risks posed by the fast-growing and increasingly competitive market, including limits on maximum risk retentions, investment concentrations and reinsurance cessions. Nonetheless, the Kazakh insurance sector remains small by international standards, with gross written premiums of KZT 370 billion (approximately USD 1.1 billion) in 2017.

Valeria Ermakova, senior financial analyst, said: “The Kazakh insurance market has overall been profitable, with the 32 companies in the market posting a three-year average return on equity of 26%, as calculated by A.M. Best for the period 2015-2017. A.M. Best notes that the profitability of the life market is noticeably higher, reflecting strong premium growth.”

The report also examines market consolidation trends, noting that the number of insurers has reduced in recent years due to increasingly stringent oversight by the regulator, which has resulted in a number of insurance licence suspensions due to non-compliance with regulatory requirements such as solvency margins, as well as the voluntary exit of some companies’ shareholders from the insurance segment. In the medium term, a further reduction in the number of insurers is expected, due to regulatory actions and as companies consolidate operations in a bid to improve their financial strength and realise the benefits of scale.

Balance sheet strength is viewed by A.M. Best as the foundation for financial security; thus, its evaluation is critical when determining a company’s ability to meet its current and ongoing obligations. Kazakh insurers rated by A.M. Best differ considerably in terms of their balance sheet strength assessment. One of the factors driving the variability is the level of risk-adjusted capitalisation that entities maintain, depending on their capital management strategies.

To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=272785.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates.
ALL RIGHTS RESERVED.

Contacts

A.M. Best
Valeria Ermakova, +44-20-7397-0269
Senior Financial Analyst
valeria.ermakova@ambest.com
or
Yevgine Asatryan, +44-20-7397-0316
Financial Analyst
yevgine.asatryan@ambest.com
or
Yvette Essen, +44-20-7397-0322
Director, Research, Communications and
Media – Europe, Middle East & Africa
yvette.essen@ambest.com
or
Edem Kuenyehia, +44-20-7397-0280
Director, Market Development & Communications
edem.kuenyehia@ambest.com

Contacts

A.M. Best
Valeria Ermakova, +44-20-7397-0269
Senior Financial Analyst
valeria.ermakova@ambest.com
or
Yevgine Asatryan, +44-20-7397-0316
Financial Analyst
yevgine.asatryan@ambest.com
or
Yvette Essen, +44-20-7397-0322
Director, Research, Communications and
Media – Europe, Middle East & Africa
yvette.essen@ambest.com
or
Edem Kuenyehia, +44-20-7397-0280
Director, Market Development & Communications
edem.kuenyehia@ambest.com