OREANDA-NEWS. Fitch Ratings has affirmed Kazakhstan-based IC Alliance-Life Insurance JSC's (Alliance-Life) Insurer Financial Strength (IFS) Rating at 'B' and its National IFS Rating at 'BB(kaz)' with Negative Outlooks. Fitch has simultaneously withdrawn the ratings.

The ratings reflect Alliance-Life's track record of negative operating performance; its portfolio concentration on annuity contracts (71% of gross written premium in 2013), which limits the insurer's risk diversification and exposes it to longevity and interest-rate risks; and its adequate capital position.

The Negative Outlook reflects Alliance-Life's high vulnerability to recent unfavourable changes in the Kazakh regulatory landscape, affecting pension annuities and workers' compensation (WC), both key lines for the insurer.

Since 2Q13, Kazakh life insurers have been unable to sell pension annuity products due to regulatory changes. In addition, WC has experienced a sharp increase in disability claims frequency in the last two years, reflecting the unfavourable claims regulation for the line. If the regulatory landscape does not improve, Fitch would expect Alliance-Life to remain unprofitable in 2014. The insurer would then be increasingly reliant on shareholder support.

Fitch has withdrawn Alliance-Life's ratings as the company has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for Alliance-Life.