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AM Best Affirms Credit Ratings of Halyk Insurance Company of Halyk Bank of Kazakhstan, JSC
[December 06, 2019]

AM Best Affirms Credit Ratings of Halyk Insurance Company of Halyk Bank of Kazakhstan, JSC

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb" of Halyk Insurance Company of Halyk Bank of Kazakhstan, JSC (Halyk Insurance) (Kazakhstan). The outlook of these Credit Ratings (ratings) remains negative.

The ratings reflect Halyk Insurance's balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management.

The negative outlooks reflect uncertainty as to whether Halyk Insurance's underwriting profitability will return to a strong level following the merger of its sister company, JSC IC Kazkommerts-Policy, in August 2018. Strong prospective performance is subject to the company's ability to implement planned expense savings.

Halyk Insurance's balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), and a relatively conservative investment portfolio with good liquidity. Offsetting factors for balance sheet strength include the low level of catastrophe reinsurance protection and the company's onerous dividend policy.

Technical results deteriorated in 2018, with the company reporting a combined ratio of 98% compared with 91.3% in 2017, largely due to accounting restatements and integration-related costs. Historically, overall profitability has been strong, demonstrated by a five-year weighted average return on capital of 13.3% for the period 2014-2018. However, this was partly the result of high investment returns, which reflect the inflationary environment in Kazakhstan in recent years.

Halyk Insurance is one of the established leaders n its domestic non-life insurance market, ranking second as measured by gross written premiums in the first ten months of 2019. As a result of the merger, the company has almost doubled its premium base and is targeting a 21% market share in 2019.

AM Best does not consider Halyk Insurance's financial strength to be affected by the weaker credit profile of its parent, Halyk Bank. This reflects AM Best's consideration of the regulatory protection that restricts extraction of capital from the insurer to its detriment.

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 Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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