AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Eurasia Insurance Company JSC (Eurasia) (Kazakhstan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Eurasia’s balance sheet strength, which AM Best assesses as strong, as well as the company’s strong operating performance, neutral business profile and appropriate enterprise risk management.

Eurasia’s balance sheet strength is underpinned by risk-adjusted capitalisation that is expected to remain comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Whilst the company has a relatively conservative investment strategy, its asset base remains heavily exposed to the high financial system risk in Kazakhstan. In addition, offsetting rating factors include Eurasia’s exposure to catastrophe risk in Kazakhstan and internationally, as well as its unsophisticated modelling capabilities. In AM Best’s opinion, Eurasia derives limited financial flexibility from its parent, Eurasian Financial Company JSC (EFC), which has a weaker credit profile, primarily due to its ownership of JSC Eurasian Bank.

Eurasia’s strong operating performance assessment is supported by good underwriting and overall profitability, with the company’s five-year (2019-2023) combined ratio ranging between 75.4% and 95% and return on equity ranging between 12.2% and 22.8% (these metrics are calculated using a combination of IFRS 4 and IFRS 17 reported figures). Whilst underwriting results have been subject to volatility in recent years, Eurasia has reported positive operating earnings in each of the last 10 years, supported by solid investment returns. The company is actively managing the performance of its underwriting portfolio by adjusting premium rates and adopting prudent risk selection for its motor third-party liability portfolio.

Eurasia has a strong position in the local (re)insurance market and benefits from geographic diversification through international inward reinsurance. It is the largest (re)insurance company in Kazakhstan, with a strong presence in the local market. The company’s international reinsurance portfolio provides diversification and accounted for approximately half of premiums written in 2023. This business primarily emanated from the United States, the United Kingdom and India, where the company maintains long-standing relationships with its cedants. However, Eurasia faces strong competition in international markets from companies with more established profiles.

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