A.M. Best Affirms Ratings of Eurasia Insurance Company JSC

LONDON--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and the issuer credit rating (ICR) of “bbb” of Eurasia Insurance Company JSC (Eurasia) (Kazakhstan). The outlook for both ratings remains stable.

The ratings reflect Eurasia’s strong level of risk-adjusted capitalisation and good competitive position within its local insurance market. Offsetting factors include the company’s deteriorating underwriting performance and pressures from the affiliated bank.

A.M. Best’s analysis of Eurasia’s immediate parent company, Eurasia Financial Company (EFC), draws attention to a significant exposure to the local Kazakh banking sector through EFC’s ownership of Eurasia Bank, which is regarded to be of vulnerable credit quality. A.M. Best considers that actions taken by Eurasia mitigate this exposure to some extent; however, if additional capital is at some stage required, it is unlikely to be provided by the immediate parent, EFC.

In A.M. Best’s opinion, Eurasia is likely to maintain a strong level of risk-adjusted capitalisation over the next two years. Eurasia’s relatively high level of capital and surplus is supported by the continuing retention of profits; however, Eurasia is exposed to reinsurers of a vulnerable or unknown credit quality in it’s outwards reinsurance programme and the struggling banking sector, via debt security investments.

Eurasia has maintained a strong local business position within Kazakhstan as the largest writer of insurance/reinsurance premiums. Over recent years the company has diversified into the international reinsurance business. A.M. Best considers that while this reduces the company’s concentration on the local Kazakh market, it also increases the company’s exposure to markets for which it has less experience.

Eurasia’s overall earnings were highly dependant on investment returns and foreign exchange gains in 2009, with the company’s underwriting performance worsening for the second successive year. A.M. Best considers that Eurasia’s combined ratio, despite deteriorating, will remain at a good level of below 90%.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Company
Analysts
Tim Prince, +(44) 20 7626 6264
[email protected]
or
Mahesh Mistry, +(44) 20 7626 6264
[email protected]
or
Public Relations
Jim Peavy, +(1) 908 439 2200, ext. 5644
[email protected]
or
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
[email protected]

Source: A.M. Best Company