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

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

Halyk Insurance’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and by its relatively conservative investment portfolio with good liquidity. Current dividend policy that limits annual dividend distribution to a maximum of 50% of prior-year earnings will support prospective internal capital generation further. Offsetting balance sheet strength factors include the company’s dependence on reinsurance and its material exposure to the high financial system risk in Kazakhstan.

Underwriting results improved in 2023, with the company reporting a combined ratio of 92.6% (based on local GAAP), compared with 93.8% in 2022 (based on IFRS), as calculated by AM Best. Halyk Insurance’s results in 2023 were supported by investment result (including gains) of 9.2%, compared with 4.3% in 2022. Overall profitability has been strong, demonstrated by a five-year (2019-2023) weighted average return on equity of 15.2%, although this is reliant partly on high investment returns, given Kazakhstan’s relatively high inflationary environment in recent years. Halyk Insurance is one of the leaders in its domestic non-life insurance market, ranking second as measured by gross written premium in 2023.

AM Best does not consider Halyk Insurance’s financial strength to be affected by the weaker credit profile of its parent, Halyk Savings Bank of Kazakhstan JSC. This reflects AM Best’s consideration of the regulatory protection that restricts extraction of capital from an insurer to its detriment.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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