TASHKENT, Uzbekistan, August 15. Fitch Ratings has affirmed the level of insurer financial strength of "IFS" (Uzagrosugurta JSC) and its life insurance subsidiary, Agros Hayot (Agros Hayot Insurance Company JSC), at "BB-". The outlook on "IFS" remains "Stable", Trend reports.
Since the corporation is still owned by the government, these ratings were confirmed (Uzbekistan, long-term issuer default rating in local currency: "BB-/outlook "Stable"). The rating level also shows how significant the insurer is to the nation's agricultural industry.
Additionally, depending on its own resources, the company's credit rating demonstrates enhanced capitalisation, favorable but unstable financial performance, and significant investment risk.
The agricultural insurance industry faces large catastrophic risks as well, but the government-provided stop-loss mechanism for crop insurance ensures that some of these risks are mitigated.
The ratings of Agros Hayot reflect its role as a key component for its sole shareholder, Uzagrosugurta, which results in an equalization of the ratings of the two companies.
State ownership is a key factor: the State Assets Management Agency of Uzbekistan owns 94.6 percent of Uzagrosugurta shares. Despite the plan to sell 2 percent of shares by the end of 2023, the state is expected to continue to operate the company, retaining control due to its systemic importance.
Key role of Agros Hayot: Fitch views Agros Hayot as a key structure for Uzagrosugurta, which leads to rating equalization. They have remained an integral part of the company's development, contributing to the achievement of government objectives. This is also evidenced by the common brand, history of support, and synergy in providing customers with a wide range of insurance products.
Capitalization improvement: Uzagrosugurta's capitalization improved from "adequate" to "strong" at the end of 2022. Revaluation of fixed assets and a high regulatory solvency margin contributed to this.
Financial performance: Despite weak profitability from insurance activities and high investment risk, the company demonstrates favorable results and capital strengthening.
Catastrophic risks: The company is prone to the risk of catastrophic losses caused by natural disasters, but this is partially mitigated by a "stop-loss" mechanism provided by the state.