AM Best Affirms Credit Ratings of Halyk Insurance Company JSC

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of the Joint-Stock Company Subsidiary of Halyk Bank of Kazakhstan Halyk Insurance Company (Halyk Insurance) (Kazakhstan). The outlook of these Credit Ratings (ratings) is stable.

These ratings reflect Halyk Insurance’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management (ERM).

Halyk Insurance’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and by its relatively conservative investment portfolio with good liquidity. Internal capital generation is supported by the company’s dividend policy, which limits annual dividend distribution to a maximum of 50% of prior-year earnings. Halyk Insurance has accumulated a large equity base that absorbs volatility associated with the company’s underwriting exposures and has a catastrophe reinsurance cover for risks in Kazakhstan and the near Central Asian countries. Offsetting balance sheet strength factors include the absence of catastrophe retrocession protection for the international book of business and the material exposure to the high financial system risk in Kazakhstan.

The company has a track record of strong operating performance supported by good underwriting results and steady investment income. Underwriting results remained robust overall in 2024, with the company reporting a net-net combined ratio of 94.2%, compared with 94.0% in 2023 (both based on IFRS 17), as calculated by AM Best. Nonetheless, the results remain exposed to volatility due to the performance of the compulsory motor third-party liability portfolio, which has been loss making. The company’s earnings have been supported by solid investment income, reflecting the high-interest rate environment in Kazakhstan and globally, as well as the favourable foreign currency exchange rate fluctuations.

Halyk Insurance is a leading insurer in the Kazakhstan non-life market, ranking second as measured by gross written premium in 2024. The company has been enhancing its profile through increased geographical diversification as it follows a strategy of expanding its domestic and international inwards reinsurance business. AM Best will continue to monitor how the company’s ERM develops given its increased risk exposures due to the growing share of its inwards reinsurance book.

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