STATISTICS:

FITCH Ratings: double digit growth rates to be expected in the Kazakh market

Fitch Ratings says in a new report that the Kazakh insurance market is forecast to grow at double-digit rates in 2017-2021, given the recovering economy and the current low levels of insurance penetration.

The insurance penetration rate (gross written premiums as a percentage of GDP) in Kazakhstan is low by international standards. After a dip in 2014, non-life penetration recovered to 0.58% of GDP in 2016. The penetration rate in life insurance is even lower, only 0.12% of GDP. This leaves significant growth potential for the Kazakh insurance sector.

However, Kazakh insurers remain exposed to a challenging operating environment with volatile real economic growth, which has slowed over the last three years and is only now starting to pick up again. Inflation is high and volatile. This makes it challenging for insurers to set appropriate prices for insurance policies. Kazakh insurers also face significant investment and foreign exchange risks.

The asset allocation of Kazakh insurance companies reflects the immaturity of the local capital market, explaining the high share of bank deposits and bonds. This, coupled with foreign exchange rate risks, could have a negative impact on the profitability of Kazakh companies.

The Kazakh insurance sector remains strongly capitalised, with the sector's net leverage ratio (net premiums and technical reserves to equity) standing at 1.4x in 2016. Fitch believes that leverage ratios will deteriorate moderately in the context of top-line market growth, if no new capital is generated or injected.

In 2016 total market net premiums grew by 15%, with the non-life sector being the main contributor. Compulsory lines helped the non-life market return to double-digit growth.

With the Kazakh economy gradually stabilising again and adjusting to external shocks, Fitch believes that growth in the Kazakh insurance market will be focused on voluntary P&C (Property & Casualty) lines in 2017.

The full report, titled "Kazakh Insurance: Growth Potential but Challenging Operating Environment'", is available at www.fitchratings.com.

Related articles

ON THE MOVE

TOP EVENT

photodune-3834701-laughing-girl-xs

"IIF2017 - Insurance in the DIGITAL World" Conference took place in Vienna

"IIF2017 - Insurance in the DIGITAL World" conference brought together in Vienna well-known insurance professionals from all over the world who analyzed the latest digital trends in the industry, taking into account the fast digitalization of the financial services providers' world, in particular in the insurance field, which is creating both huge opportunities and strong challenges for the players.

14.11.2017

photodune-3834701-laughing-girl-xs

Croatian Insurance Days Live

On 9 November has started in Opatija, Croatia, the 2017 edition of the Croatian Insurance Days Conference, the traditional meeting of the Croatian insurance top professionals with their European peers. XPRIMM Publications are supporting the event as Media Partners.

09.11.2017

photodune-3834701-laughing-girl-xs

The 2017 Baden Baden Meeting: Short recap

The Baden-Baden meeting, one of the key events in the reinsurance calendar, has just set the final point of this year's edition. XPRIMM Publications have reported from the meeting's premises. Let's recap!

26.10.2017

Baden Baden Headlines 3: CEE insurance markets are attractive for reinsurers

Central and Eastern Europe insurance markets are an important source of business for Lloyds, total premium income from this region increasing by EUR 64 million since 2010, pointed out the Lloyd's representative in a seminar dedicated to CEE insurance markets: "We are seeing strong growth from Czech Rep, Poland, Slovakia and Ukraine. At the same time are some contractions from Russia, Bulgaria, Romania and Hungary due to challenging trading conditions as political implications and other sanctions".

25.10.2017

Baden Baden Headlines 2: cyber insurance market set to grow under regulatory presure; nat cat events more frequent, but losses per event are decreasing

Asian insurance market, especially the Indian market - are considered to be "the new El-Dorado" of the global re/insurance market, with rapidly expanding markets and an dynamic environment: "Indian P&C re/insurance markets are expected to grow at a pace of 15% per annum", according  to Victor PEIGNET, CEO, Global P&C, SCOR SE. The French -based reinsurer setted-up its Indian branch in 2016, after the authorisation from the local market authority - IRDAI. India's re/insurance market has become more attractive for global companies following the relaxation of regulatory requirements, and lately, "big names" in the industry entered the market by opening branches: GEN Re, SCOR, Lloyd's of London, MUNICH Re, SWISS Re, Reinsurance Group of America (RGA), HANNOVER Re, XL Catlin and others.

24.10.2017

BB Headlines: Rates are settled to increase following Q3 events

The main effect after the Q3 nat cat bill of over USD 100 billion: Global reinsures said - the "discounts and reductions in tariffs era" especially in European reinsurance market for the January 2018 renewals, will come to end. At the same time, some reinsurers might disappear and there are likely to be more mergers, acquisitions and run-offs processes.

23.10.2017

See all