BAKU, Azerbaijan, Dec. 22
By Klavdiya Romakayeva - Trend:
Uzagrosugurta insurance company will remain state-owned and will focus on strengthening reporting and corporate governance standards, as well as developing a long-term strategy, Trend reports referring to the press service of Fitch Ratings Agency.
Fitch Ratings Agency has affirmed the insurer's financial strength rating (FSR) of Uzbekistan’s Uzagrosugurta JSC at 'BB-'. The rating outlook is stable.
According to Fitch, the rating is resulted from the support and is in line with Uzbekistan's Long-term Local-Currency Issuer Default Rating (IDR) of 'BB-'. Equalization of the company's rating with the IDR of Uzbekistan reflects indirect ownership by the state and the systemic importance of the insurer for the agricultural sector, one of the main ones for the country's economy.
In addition, the rating takes into account the availability of a stop-loss mechanism for insurance of agricultural crops from the government since June 2019 and the history of capital support provided to the insurer.
A 94 percent stake in Uzagrosugurt belongs to the State Assets Management Agency of Uzbekistan, a government organization set up to consolidate and manage various state-owned enterprises.
Since its foundation in 1997, the insurer has been owned by the state. Uzagrosugurta focuses on providing insurance coverage to the agricultural sector, whose contribution to Uzbekistan's GDP remains one of the keys, and also manages a diversified portfolio of traditional risks in the non-life insurance segment.
Fitch believes the company's stand-alone profile is weak due to weak risk-adjusted capitalization and the potentially high risk of portfolio provisioning from previous years. The provisioning risk assessment takes into account very limited good quality loss statistics, underdeveloped IT systems, emerging actuarial experience, and a simplified provisioning regulatory methodology.
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