AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” (Good) to PASHA Insurance OJSC (PASHA Insurance) (Azerbaijan). The outlook assigned to these Credit Ratings (ratings) is stable. PASHA Insurance is wholly owned by PASHA Holding LLC (PASHA group), a diversified investment holding group in Azerbaijan.

The ratings reflect PASHA Insurance’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

PASHA Insurance’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level in the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR), albeit with a somewhat limited buffer. The company has a history of high dividend payout ratios, which has limited the growth of its capital base. The assessment is supported by the company’s conservative investment allocation with a good level of liquidity. However, the asset base has a notable concentration in Azerbaijan, which exposes the company to the high economic, political and very high financial system risks. The ratings also consider PASHA Insurance’s moderate reliance on reinsurance; however, the associated credit risk is mitigated partly by a stable reinsurance panel of excellent credit quality.

PASHA Insurance has a track record of strong operating results, evidenced by a net/net combined operating ratio of 87.5% and a return on equity of 43.8% in 2024 (87.6% and 40.2% in 2023, respectively). Investment results have supplemented earnings with an 8.8% investment yield in 2024 (2023: 7.9%).

PASHA Insurance’s business profile is supportive of its limited assessment. While the company is the market leader in the domestic non-life market, its business portfolio is subject to geographical and product concentrations. PASHA Insurance has undertaken steps in recent years through internal and external resources to improve its governance and ERM framework. The company’s ERM is considered to be appropriate relative to its risk profile.

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