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• Content META

  Title	Sinoasia B&R Insurance JSC 'BB' Ratings Affirmed; Outlook Stable
  ID	3706331
  External ID	7254336569
  Author	Unknown
  Published Date	Oct. 28, 2024, 11:44 a.m.
  Summary	Sinoasia B&R Insurance JSC's (SABR's) capitalization has strengthened so far in 2024 amid solid earnings and a fresh capital injection. We expect SABR's shareholders' equity to be sustainably higher t
  Tags	None
  URL	https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/html/id/3275304
  Sentiment	Negative: 0.01464    Neutral: 0.03360    Positive: 0.95175
  Relevance	0.03318

• Content Details

  Content ID	1992307
  Key	4318589a-2377-434c-9ad7-e55862fb4f2e
  Content	Sinoasia B&R Insurance JSC's (SABR's) capitalization has strengthened so far in 2024 amid solid earnings and a fresh capital injection. We expect SABR's shareholders' equity to be sustainably higher than $25 million in 2024-2026. At the same time, we see risks from potential earnings volatility amid recent rapid growth and a business model shift toward property and casualty products from a monoline health insurer, as well as still-modest absolute capital. We now view SABR as strategically important to its parent, Bank CenterCredit JSC (BCC; BB-/Positive/B), instead of moderately strategic, due to the majority of business coming from the BCC and the insurer posting a more-sustainable track record of collaboration with the parent bank. We still view SABR as an insulated entity due to the strong regulatory oversight and SABR's operational independence from its parent. We therefore affirmed our 'BB' long-term issuer credit and financial strength ratings and our 'kzA+' national scale rating on SABR. The stable outlook indicates that we expect the insurer will maintain its solid capital adequacy and asset quality over the next 12 months, while profitably expanding and diversifying its business franchise. FRANKFURT (S&P Global Ratings) Oct. 28, 2024--S&P Global Ratings today affirmed its 'BB' long-term issuer credit and financial strength ratings and its 'kzA+' national scale rating on Sinoasia B&R Insurance JSC (SABR). The outlook is stable. The affirmation follows SABR's profitable business growth and increasing capital base. Its absolute capital increased to $30 million as of Sept. 30, 2024 from $17 million as of Dec. 31, 2023, stemming from solid earnings and a fresh capital injection of $4 million. We expect SABR's capital to remain above $30 million in the next two years. We forecast that the insurer's capital adequacy will remain at the 99.99% level in 2024-2025, similar to 2023, thanks to solid profitability, with a return on equity of 30%-40% and no dividends. As of Oct. 1, 2024, SABR also had a sufficient regulatory solvency margin at 1.97x. We expect the company to maintain this at 1.9x-2.2x in 2024-2025. We apply a negative comparable adjustment notch to our ratings because of recent rapid growth, and uncertainty about the insurer's ability to price its insurance portfolio and manage reserving risks from its new portfolio. We think the very strong revenue growth of 68% in 2023 and 51% in the first nine months of 2024, along with the expected shift of strategic focus, could bring volatility to the insurer's earnings and capital adequacy. The company's intention to diversify its insurance portfolio through increasing property and voluntary motor hull and inward reinsurance implies, in our view, a substantial business model transformation that could lead to more risks and, ultimately, earnings deterioration. Our competitive position assessment continues to reflect SABR's midsize premium base in absolute terms, its developing franchise, and intense competition in Kazakhstan's insurance market. With about Kazakhstan tenge (KZT) 30.4 billion (about $63 million) in gross premiums written and a market share of 5.7% as of Oct. 1, 2024 (up from 4% in 2023), Sinoasia is the sixth-largest company in the Kazakhstani property/casualty insurance market. We expect SABR's financial risk profile will continue benefiting from its investment portfolio's credit quality, averaging in the 'BBB' category. The portfolio comprises international bonds from blue-chip companies and Kazakhstani issuers--mostly sovereign and quasigovernment bonds--and short-term reverse repurchase agreements collateralized by Kazakhstani government bonds. We do not expect material changes to the portfolio in 2024-2025. We view SABR as a strategically important subsidiary of BCC. We think SABR is important to the group's long-term strategy, which envisages business diversification but also considers insurance business an essential part of its financial services offering. We expect BCC will play an increasingly important role in SABR's distribution network and potentially account for more than half of the insurer's sales in the next couple of years as BCC and SABR will use the synergy effects from their strategic cooperation. Still, the property/casualty insurer only constitutes a small part of the group when measured by assets (2%) and capital (1%). We assume the regulatory framework will continue to prevent an excessive outflow of capital through dividend payments or material investments from SABR to support the group. The regulatory framework includes the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market's constant oversight of the insurer. Consequently, we can rate SABR up to one notch higher than the 'bb-' group credit profile to reflect our view of the insurer as an insulated entity. The liquidity ratio--a measure of stressed assets over stressed liabilities--stood at about 1.5x at year-end 2023 based on our calculations. We think the insurer will maintain sufficient liquid funds to meet its liabilities even in a stress scenario. The stable outlook indicates that we expect SABR will maintain its solid capital adequacy and asset quality over the next 12 months, while expanding and diversifying its business franchise. We could consider a downgrade over the next 12 months if: The insurer's risk profile deteriorates in terms of product and investment risks, with the average credit quality of invested assets falling below the 'BBB' category; or We observe a significant and sustained deterioration in SABR's capital below the 99.8% confidence level. This could result from more aggressive growth, unexpected losses not offset by capital injections, or substantial dividends. An upgrade is unlikely in the next 12 months, in our view. Beyond then, a positive rating action would hinge on successful strategy implementation, seen with sustainable underwriting results, solid capital buffers, and no changes in risk appetite. Any rating action depends on potential constraints from the wider group's creditworthiness on SABR's financial strength. Related Criteria Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.spglobal.com/ratings for further information. A description of each of S&P Global Ratings' rating categories is contained in "S&P Global Ratings Definitions" at https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/504352. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.spglobal.com/ratings. Alternatively, call S&P Global Ratings' Global Client Support line (44) 20-7176-7176. Regulatory Disclosures For Each Credit Rating Including Ratings List Table Disclosures include requirements relating to press releases or reports published in accordance with Article 10(1), 10(2), and 10(5), and Annex I, Section D, I, 1, 2, 2a, 4, and 5. These requirements are available by rating via the link titled "Regulatory Disclosure" and include, but are not limited to: Key Elements Underlying The Credit Rating ESG Credit Factors Solicited Or Unsolicited Status Analysts Primarily Responsible For The Credit Rating Office Responsible For The Credit Rating Materials Used In The Credit Rating Process Criteria Applied Models Applied, Loss, And Cash Flow Analysis Performed Scenario Analysis Sensitivity Analysis Risk Warning, Understanding Credit Rating Categorizations, And Criteria Rated Entity Notification Ancillary And Additional Services Attributes And Limitations Of The Credit Rating Information Specific To Structured Finance And Securitization Instruments Contact the analysts:
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  Publisher Name	S&P Global
  Publisher URL	https://www.spglobal.com
  Description	None
  Trust Flow Score	33
  Citation Flow Score	43

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  Data Source Name	Quantexa News
  Data Source Type	news
  Data Source URL	https://app.aylien.com/dashboard
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  Weight	10