05.02.2016, 14:59
Fitch affirms ratings of Insurance Company Alliance Policy at "B" and "BB+(kaz)", Negative outlook
OREANDA-NEWS. Fitch Ratings has affirmed Kazakhstan-based JSC IC Alliance Polis's (Alliance Polis) Insurer Financial Strength (IFS) rating at 'B' and National IFS rating at 'BB+ (kaz)'. The ratings have been removed from Rating Watch Negative (RWN) and simultaneously withdrawn. The Outlooks are Negative.
KEY RATING DRIVERS
Fitch has chosen to withdraw the ratings of Alliance Polis for commercial reasons.
The Negative Outlook reflects Fitch's expectation that the transfer of the major part of Alliance Polis's portfolio to a smaller Kazakh insurer JSC Insurance Company 'Standard' (IC 'Standard') from 1 February 2016 might be exposed to execution risks and result in a weakening of Alliance Polis's financial profile. The portfolio transfer follows the intent of Alliance Polis's shareholder to withdraw from the insurance sector.
According to Kazakh regulation, Alliance Polis would need to obtain 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-in-force 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.
Local regulation requires the accepting party, IC 'Standard', to comply with prudential requirements after the transfer. The regulatory approval has not yet been received by IC 'Standard', while an assessment of the transferable 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.
KEY RATING DRIVERS
Fitch has chosen to withdraw the ratings of Alliance Polis for commercial reasons.
The Negative Outlook reflects Fitch's expectation that the transfer of the major part of Alliance Polis's portfolio to a smaller Kazakh insurer JSC Insurance Company 'Standard' (IC 'Standard') from 1 February 2016 might be exposed to execution risks and result in a weakening of Alliance Polis's financial profile. The portfolio transfer follows the intent of Alliance Polis's shareholder to withdraw from the insurance sector.
According to Kazakh regulation, Alliance Polis would need to obtain 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-in-force 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.
Local regulation requires the accepting party, IC 'Standard', to comply with prudential requirements after the transfer. The regulatory approval has not yet been received by IC 'Standard', while an assessment of the transferable 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.
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