AM Best Affirms Credit Ratings of Eurasia Insurance Company JSC

OCTOBER 04, 2024 10:17 AM (EDT)

AM Best Affirms Credit Ratings of Eurasia Insurance Company JSC

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FOR IMMEDIATE RELEASE

LONDON - OCTOBER 04, 2024 10:17 AM (EDT)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb+" (Good) of Eurasia Insurance Company JSC (Eurasia) (Kazakhstan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Eurasia's balance sheet strength, which AM Best assesses as strong, as well as the company's strong operating performance, neutral business profile and appropriate enterprise risk management.

Eurasia's balance sheet strength is underpinned by risk-adjusted capitalisation that is expected to remain comfortably at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). Whilst the company has a relatively conservative investment strategy, its asset base remains heavily exposed to the high financial system risk in Kazakhstan. In addition, offsetting rating factors include Eurasia's exposure to catastrophe risk in Kazakhstan and internationally, as well as its unsophisticated modelling capabilities. In AM Best's opinion, Eurasia derives limited financial flexibility from its parent, Eurasian Financial Company JSC (EFC), which has a weaker credit profile, primarily due to its ownership of JSC Eurasian Bank.

Eurasia's strong operating performance assessment is supported by good underwriting and overall profitability, with the company's five-year (2019-2023) combined ratio ranging between 75.4% and 95% and return on equity ranging between 12.2% and 22.8% (these metrics are calculated using a combination of IFRS 4 and IFRS 17 reported figures). Whilst underwriting results have been subject to volatility in recent years, Eurasia has reported positive operating earnings in each of the last 10 years, supported by solid investment returns. The company is actively managing the performance of its underwriting portfolio by adjusting premium rates and adopting prudent risk selection for its motor third-party liability portfolio.

Eurasia has a strong position in the local (re)insurance market and benefits from geographic diversification through international inward reinsurance. It is the largest (re)insurance company in Kazakhstan, with a strong presence in the local market. The company's international reinsurance portfolio provides diversification and accounted for approximately half of premiums written in 2023. This business primarily emanated from the United States, the United Kingdom and India, where the company maintains long-standing relationships with its cedants. However, Eurasia faces strong competition in international markets from companies with more established profiles.

This press release relates to Credit Ratings that have been published on AM 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 AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.