BAKU, Azerbaijan, June 17
By Yusif Aghayev – Trend:
S&P Global Ratings has assessed country (external) and sectoral (internal) risks of non-life insurance sector in Azerbaijan, Trend reports referring to the S&P.
“Although the country risk in Azerbaijan, as in many other countries, will continue to have a negative impact on the Insurance Industry and Country Risk Assessment (IICRA), the return on equity (ROE) and return on revenue (ROR) in 2020 are expected to reach 10 percent and 15 percent, respectively, and are expected to support the profitability of the insurance sector,” S&P analysts said.
“The country's insurance companies are gradually improving their performance thanks to the measures to optimize the costs and improve the underwriting practice,” S&P added referring to the sectoral risks. “The leaders of the Azerbaijani insurance market showed high results of insurance activity, which increased the performance of the sector as a whole. A high concentration of the Azerbaijani insurance sector, which determines the current market trends, has been stressed.”
“The institutional system of the Azerbaijani insurance sector will gradually improve as the Central Bank of Azerbaijan became the market regulator in late 2019,” S&P stressed.
"We think that our IICRA assessment in Azerbaijan is unlikely to greatly decrease in the next 12-18 months, taking into account the current changes in the economy and the expected measures of the regulatory body aimed at improving profitability, growth prospects and the regulation of the insurance sector," S&P said.
In their opinion about the Azerbaijani non-life insurance sector, S&P analysts take into account its good profitability indicators, the dynamics of the sector and the characteristics of insurance products, which have a positive impact on the profitability indicators of the companies operating in this segment.
"We assess the prospects for the market growth and profitability of the Azerbaijani non-life insurance sector based on the financial statements of the ten biggest insurance companies that generate more than 80 percent of the total insurance gross premium volume," S&P said.
Today, 21 insurance companies and one reinsurance company operate in Azerbaijan.
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