AM Best Affirms Credit Ratings of Life Insurance Company Kommesk-Omir JSC

AM Best has affirmed the Financial Strength Rating of B- (Fair) and the Long-Term Issuer Credit Rating of “bb-” (Fair) of Life Insurance Company Kommesk-Omir JSC (Kommesk Life) (Kazakhstan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Kommesk Life’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, very limited business profile and marginal enterprise risk management.

Kommesk Life’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is projected to remain at the strongest level over its five-year business plan, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Kommesk Life’s risk-adjusted capitalisation to be supported by positive operating results in the medium term and full earnings retention as the company executes its business plan. In addition, Kommesk Life’s balance sheet strength assessment considers its limited reliance on reinsurance. A partially offsetting rating factor is the relatively low credit quality of Kommesk Life’s investment portfolio, reflecting its concentration in its domestic market, which exposes the company to high levels of economic, political and financial system risks associated with Kazakhstan.

The adequate operating performance assessment considers Kommesk Life’s business plan to develop its profile as a specialised life insurer. AM Best expects Kommesk Life to grow its earnings and maintain positive technical return metrics over the underwriting cycle, notwithstanding the execution risk associated with its planned scale up. In 2023, under IFRS 17, Kommesk Life reported profit before tax of KZT 361 million.

Kommesk Life restructured its operations in recent years, in line with its decision to operate as a specialist life insurer. The company transferred out its non-life insurance portfolio to an affiliate in 2022, and merged with its former life insurance subsidiary, Life Insurance Company Centras Kommesk Life JSC, in 2023. Kommesk Life operates solely in the competitive Kazakh market, underwriting traditional life products, pension annuities and workers’ compensation insurance. The very limited assessment of the business profile reflects Kommesk Life’s portfolio, which, albeit projected to grow, has a small size by domestic and international standards. The execution and market acceptance risks associated with Kommesk Life’s plan to materially scale up its current operations in the life segment are partially mitigated by the presence of an experienced and stable management team. In line with its plan, the company reported total premium of approximately KZT 8.7 billion (USD: 19.0 million) in 2023.

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. For more information, visit www.ambest.com.

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