KAZAKHSTAN: average ROE in non-life sector exceeded 12% in 2019

10 February 2020 — Marina MAGNAVAL
Total profit of the insurance market in 2019 decreased by 0.6% y-o-y, despite its GWP growth, and amounted, according to the regulator, to KZT 78.4 billion (EUR 0.18 billion), Allinsurance.kz reports.

According to local experts, the market remained within the profit levels of 2018, only thanks to the profit growth of life segments (almost double vs. a decrease by a quarter in the profit of non-life business lines). At the same time, most non-life companies received more income from investment activities than from the core business (insurance). For example, nine non-life insurers ended 2019 with losses from underwriting activity and tried to offset this result with investments.

Market specialists motivate loss-making insurance business with the high level of expenses and large claims. Investment attractiveness of companies was demonstrated by return on equity (ROE). In 2019 the average ROE in the non-life market reached 12.2% (vs. about 10% in some more developed insurance markets). However, per company, the situation is rather different - for 5 non-life insurers ROE sat above the average, for 10 companies - below average, while for 4 non-life insurers - ROE had a negative value.

Given this "diversion" of the non-life market, the experts believe that the Kazakh market needs to improve underwriting discipline and to reduce costs without shifting their focus to investment activities.

*1 EUR = 426.85 KZT (December 31st, 2019)

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