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

19-Apr-2018 Intellasia | BusinessWire | 2:00 PM Print This Post

LONDON–(BUSINESS WIRE)–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

[email protected]
or
Yevgine
Asatryan, +44-20-7397-0316

Financial Analyst
[email protected]
or
Yvette
Essen, +44-20-7397-0322

Director, Research, Communications
and

Media – Europe, Middle East & Africa
[email protected]
or
Edem
Kuenyehia, +44-20-7397-0280

Director, Market Development &
Communications

[email protected]

 


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