AM Best Affirms Credit Ratings of Kommesk-Omir Insurance Company JSC

LONDON–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B- (Fair) and the Long-Term Issuer Credit Rating of �bb-” of Kommesk-Omir Insurance Company JSC (Kommesk) (Kazakhstan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Kommesk’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, very limited business profile and marginal enterprise risk management.

Kommesk’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by the Best’s Capital Adequacy Ratio (BCAR). AM Best expects risk-adjusted capitalisation to remain at the strongest level supported by positive operating results and the absence of dividend payments, as it executes is strategic business plan. In addition, Kommesk’s balance sheet strength considers the company’s comprehensive reinsurance programme, which is backed by a panel of reinsurers of sound financial strength. Offsetting rating factors include the relatively low credit quality of the company’s investment portfolio and its exposure to high financial system risk in Kazakhstan.

Kommesk’s achieved a five-year (2016-2020) weighted average return-on-capital ratio of 14.0%, mainly supported by investment returns. Historically, underwriting performance has been marginal. However, in 2020, Kommesk improved its operating performance, with the company reporting a combined non-life ratio of approximately 97% compared with 120% in 2019 (as calculated by AM Best). The improvement was driven by the re-underwriting of the motor third-party liability business using stricter underwriting criteria, which resulted in a lower loss ratio. Whilst technical results have strengthened in 2020, uncertainty remains on the sustainability of the 2020 levels of underwriting profitability, given Kommesk’s significant growth of its voluntary motor book, which generates higher losses and incurs higher acquisition costs.

Kommesk is a small insurer operating solely in the competitive Kazakhstan market. The company’s underwriting portfolio is concentrated, with two-thirds of its 2020 net written premiums sourced from compulsory and voluntary motor business. At the end of 2019, Kommesk established a new life subsidiary, Centras Kommesk Life JSC, which underwrites domestic workers’ compensation business. Whilst the company’s current consolidated market share remains small at 2%, based on 2020 gross written premiums, profitable growth into the life segment has the potential to improve Kommesk’s business profile over the short-to-medium term.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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Contacts

Todor Kitin
Financial Analyst
+44 20 7397 0335
todor.kitin@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jessica Botelho–Young, CA
Associate Director, Analytics
+44 20 7397 0310
jessica.botelho@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com