A.M. Best Affirms Ratings of Nomad Insurance Company JSC

A.M. Best has affirmed the FSR of B- (Fair) and the ICR of “bb-” of Nomad Insurance Company JSC (Nomad). The outlook on both ratings remains stable.

Nomad is a subsidiary of Nomad Insurance Group Limited, a private non-operating company. Both entities are domiciled in Kazakhstan.

The ratings affirmation reflects Nomad’s supportive risk-adjusted capitalisation, which is expected to strengthen further in 2014, due to a combination of factors including a KZT 1.7 billion (approximately USD 9.3 million) capital injection during the year, the improved quality of its reinsurance panel and lower growth in net premium volumes. Nomad’s operating performance remains strong, as demonstrated by a five-year return on net earned premiums of 43%, underpinned by the relatively low claims frequency in Kazakhstan.

The ratings of Nomad also reflects its relatively small size (by international standards), which A.M. Best views as reducing its ability to defend against sudden changes in the operating and regulatory environment. The capital management strategy of the company is to maintain a solvency margin at the minimum level prescribed by the Kazakh regulator, which makes Nomad highly dependent on external support from its shareholder.

There are no positive rating pressures at present. A decline in Nomad’s risk-adjusted capitalisation, either due to a decrease in the quality of its asset base or in operating performance will likely result in negative rating actions. Additionally, deterioration in the economic conditions of Kazakhstan may result in downwards rating pressure.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilised:

• Catastrophe Analysis in A.M. Best Ratings
• Evaluating Country Risk
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

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