Fitch Ratings-Moscow-28 June 2018: Fitch Ratings has affirmed Kazakhstan-based Joint Stock Company AMANAT's (AMANAT) Insurer Financial Strength (IFS) Rating at 'B' and National IFS Rating at 'BB+(kaz)'. The Outlooks are Stable.
KEY RATING DRIVERS
The ratings reflect AMANAT's weak business profile, uncertainty over the success of a new challenging business strategy implementation and the weak, albeit improving, credit quality of its investment portfolio. The ratings also reflect AMANAT's improved risk-adjusted capital position and moderate financial performance.
In October 2017, AMANAT ceased writing single large commercial property and casualty contracts, which were almost fully reinsured. These contracts showed little profitability and created significant volatility in AMANAT's accounts. In addition, in April 2018, AMANAT launched a new strategy aimed at reducing acquisition costs.
Fitch views these strategic changes as positive for the credit profile of the company in the long run.
AMANAT's risk-adjusted capital position, as measured by Fitch's Prism Factor-based model (Prism FBM), strengthened to 'Strong' based on 2017 results, significantly higher than in 2016. The improvement is mainly attributable to falling net business volumes, driven by a decline of net premium income by 13% in 2017 and consequent reduction in required capital. At the same time, available capital increased due to two capital injections in 2017. The regulatory solvency margin, calculated based on a Solvency-I like formula was a strong 174% at end-2017.
AMANAT's financial performance is moderate, in Fitch's view. AMANAT's reported income was KZT197 million in 2017, slightly higher than 2016's KZT154 million, with an increase in net income return on equity (ROE) to 5.3% from 4.7% during the same period. The positive net result was driven by the stronger investment income of KZT576 million, slightly higher than prior year's KZT491 million. However, investment yield slightly dropped to 10% from 10.7% following a decline in market yields.
Additional information is available on www.fitchratings.com.
Amanat JSC multi-functional insurance company, located in all major Kazakhstan cities. Today company is in TOP 10 insurers in regarded with voluntary motor, cargo, property and third-party liability insurance.
In according with National Bank of Kazakhstan report, on May 1, 2018 IC Amanat JSC is on 11th place with total insurance premium on non-life business KZT 1,910 bln. Company active is KZT8,410 bln., shareholders' equity KZT4.154 bln., authorized capital KZT 1,930 bln.
Insurance company «Amanat»
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