TASHKENT, Uzbekistan, December 21. Moody’s Investors Service (Moody’s) has assigned Uzbekistan’s Kafil Sugurta insurance company with a B2 local currency (LC) and foreign currency (FC) insurance financial strength ratings (IFSRs) with stable outlook, Trend reports.
As per data provided by Moody’s, the B2 IFSRs rating of of Kafil Sugurta reflects the company’s good market position as the 10th largest property and casualty insurer in terms of Net Written Premiums and the 12th largest in terms of Gross Written Premiums (GWP) in Uzbekistan, with a market share of around 2 percent in 2022.
Moreover, the rating reflects the company’s diversified product mix balanced between commercial and retail lines, as well as its track record of profitable performance and currently adequate capital adequacy relative to its insurance risk and the use of reinsurance.
Moody’s states that Kafil has a limited geographical diversification, with virtually all premiums underwritten in Uzbekistan, while its product mix reflects increasing focus on retail lines which accounted for around 40 percent of GWP in 2022 and will likely increase to around 50 percent by the end of 2023, reducing concentration risks.
“Kafil's exposure to local banks accounted for around 27 percent of its total assets or 56 percent of shareholders’ equity at year-end 2022. In addition, Kafil’s exposure to equity investments in local companies accounted for 32 percent of its shareholder’s equity in 2022. Moody's does not expect the composition of Kafil's investment portfolio to materially change over the next 12-18 months,” the report says.
According to Moody’s, Kafil's IFSRs could be upgraded if the company materially strengthens its market position in the Uzbek insurance market and improves its asset quality with a reduction of its illiquid equity investments, while maintaining profitable performance and good capital adequacy.
“An improvement in the operating environment in Uzbekistan, would also place upward pressure on the ratings. Conversely, the ratings could face downward pressure in case of a significant deterioration in the company's capitalization, a weakening of its asset quality, an increase in the company's risk appetite, or significant deterioration in the economic environment in Uzbekistan,” Moody’s analysts explained.