A.M. Best Affirms Credit Ratings of Standard Insurance Company JSC

21-Sep-2017 Intellasia | BusinessWire | 10:41 PM Print This Post

LONDON–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of C++
(Marginal) and the Long-Term Issuer Credit Rating of “b+” of Standard
Insurance Company JSC
(Standard) (Kazakhstan). The outlook of these
Credit Ratings (ratings) remains stable.

The ratings reflect Standard’s volatile risk-adjusted capitalisation,
track record of weak technical performance and limited business profile
in Kazakhstan’s non-life insurance market. The ratings also take into
account Standard’s underdeveloped risk management framework.

In line with A.M. Best’s expectations, the company’s risk-adjusted
capitalisation declined materially in 2016, due to higher underwriting
risk following its absorption of a major part of the insurance portfolio
of Alliance Polis Insurance Company JSC (Alliance Polis). As at
half-year 2017, Standard’s risk-adjusted capitalisation improved,
following the non-renewal of a significant part of the recently absorbed
portfolio. However, risk-adjusted capitalisation remains relatively low,
as measured by Best’s Capital Adequacy Ratio (BCAR) and as demonstrated
by a regulatory solvency margin of 1.27 as of Aug. 1, 2017 (compared to
a minimum requirement of 1.00).

In 2016, the company’s underwriting performance improved, benefiting
from a material rise in net written premium. The company reported
technical profit for the first time since 2012, when it was acquired by
the current shareholders, and reported a combined ratio of 87.6% (2015:
120.9%). However, A.M. Best believes that the company will report an
underwriting loss once again in 2017, due to the expected reduction in
premium income and the ongoing impact of elevated expenses.

In 2016, Standard’s market share improved as a result of the absorption
of Alliance Polis’s insurance portfolio and the addition of a number of
large fronted contracts. As of Jan. 1, 2017, the company ranked 11th out
of 25 non-life insurers in Kazakhstan, up from 15th a year earlier, with
gross written premium of KZT 9.0 billion (approximately USD 27 million)
and a market share of 3.3%. The company’s prospective market ranking
will depend on the retention levels of the new client base and the
competitive conditions in Kazakhstan’s insurance market.

The rating actions also reflect Standard’s underdeveloped risk
management framework, specifically with regard to monitoring its risk
accumulations within Kazakhstan’s earthquake-exposed areas. As a result,
uncertainty exists as to the ability of Standard’s reinsurance programme
to adequately protect the company against a catastrophic event.

This press release relates to Credit Ratings that have been published
on A.M. Best’s website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best’s
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view
Guide
for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases
.

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

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its
subsidiaries. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Laura Balkarova, +44-20-7626-6264
Associate
Financial Analyst

laura.balkarova@ambest.com
or
Mathilde
Jakobsen, +44-20-7397-0266

Director, Analytics
mathilde.jakobsen@ambest.com
or
Christopher
Sharkey, +1-908-439-2200, ext. 5159

Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim
Peavy, +1-908-439-2200, ext. 5644

Director, Public Relations
james.peavy@ambest.com

 


Category: BusinessWire, PRAsia

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