Fitch places ratings of Insurance Company Alliance Policy on Rating Watch Negative
27.01.16 12:37
/Fitch Ratings, Moscow, January 26, 16, KASE heading/ – Fitch Ratings has
placed Kazakhstan-based JSC IC Alliance Polis's (Alliance Polis) Insurer
Financial Strength (IFS) rating of 'B' and National IFS rating of 'BB+ (kaz)'
on Rating Watch Negative (RWN).
The placement on RWN follows Alliance Polis's decision to transfer most of its
portfolio to a smaller local insurer JSC Insurance Company 'Standard' (IC
'Standard') from 1 February 2016. This decision reflects the intent of Alliance
Polis's shareholder to withdraw from the insurance sector.
KEY RATING DRIVERS
According to the Kazakh regulation, Alliance Polis would need to obtain a
written consent from every policyholder to be able to transfer each individual
policy to IC 'Standard'. Fitch does not expect this to complete by 1 February
2016, which raises the possibility that at least some part of the portfolio
will remain with Alliance Polis.
The liabilities relating to the expired workers compensation policies will
remain on the balance sheet of Alliance Polis to be managed in run-off till
end-2018. According to Alliance Polis's assessment these liabilities amount to
KZT1.7bn.
Fitch will look to resolve the RWN upon the review of the independent actuarial
assessment of the liabilities, in addition to the assessment of the liabilities
to remain on the balance sheet of Alliance Polis and the distribution of assets
covering the transferred and remaining liabilities as soon as the factual
transfer is done.
Local regulation requires the accepting party, IC 'Standard', to comply with
prudential requirements after the transfer. The regulatory approval has not yet
been received, while an assessment of the assets, liabilities and required
regulatory capital has yet to be completed.
Both Alliance Polis and IC 'Standard' had significant buffers in their
regulatory solvency margin at 330% and 252% at end-November 2015, respectively.
However, Alliance Polis's portfolio may put pressure on IC 'Standard's
regulatory capital since the accepting party is a smaller company with only
KZT2.4bn of net written premiums in 11M15, compared with KZT4.8bn written by
Alliance Polis in the same period.
The commitment of Alliance Polis's shareholder to support the insurer, is also
uncertain, should the liabilities managed in the run-off mode exceed the
assessment made at the transfer.
RATING SENSITIVITIES
Failure to obtain regulatory approval for the transfer or, failure to receive
policyholder acceptance for a significant part of the portfolio or, retention of
assets of weaker quality to cover the remaining liabilities, will trigger a
downgrade.
An upgrade is unlikely given the switch to the run-off mode and the willingness
of the shareholder to cease activity in the insurance sector.
Contact:
Primary Analyst
Anastasia Litvinova
Director
+7 495 956 7082
Fitch Ratings CIS Limited
Valovaya Street, 26
Moscow 115054
Secondary Analyst
Anastasia Surudina
Analyst
+7 495 956 5570
Committee Chairperson
Martyn Street
Senior Director
+44 20 3530 1211
Media Relations: Julia Belskaya Von Tell, Moscow,
Tel.: + 7 495 956 9908/9901, julia.belskayavontell@fitchratings.com
[2016-01-27]