AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Victoria Insurance Company JSC (Victoria) (Kazakhstan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Victoria’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and weak enterprise risk management.

Victoria’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and its relatively conservative investment portfolio by asset class, providing the company with good levels of liquidity. A track record of solid internal capital generation has resulted in the accumulation of a large shareholders’ equity base, available to absorb potential volatility associated with Victoria’s underwriting exposures and challenging operating environment. The company purchases reinsurance from international companies of high credit quality. Nevertheless, Victoria does not have an excess of loss cover to protect against potential catastrophe losses, which is an offsetting factor in the balance sheet strength assessment given its exposure to the high risk of earthquakes in parts of Kazakhstan.

Victoria has a track record of strong operating performance supported by solid underwriting profitability, as demonstrated by a five-year (2019-2023) weighted average combined ratio of 77.8% (as calculated by AM Best). However, technical results have been volatile due to low frequency, high severity claims in its property and liability books of business. In 2023, Victoria reported overall unaudited pre-tax earnings of KZT 7.5 billion (approximately USD 16.4 million), compared with KZT 9.5 billion (approximately USD 18.3 million) in the previous year, underpinned by a good technical result of KZT 1.3 billion (approximately USD 2.9 million) and solid investment returns, reflecting the high interest rate environment in Kazakhstan and globally. AM Best expects Victoria’s operating performance to remain strong, albeit potentially volatile due to changes in the value of fixed-income investments as a result of interest rates and foreign currency exchange fluctuations.

Victoria has a limited business profile as a small, albeit growing, non-life insurer operating solely in Kazakhstan’s fragmented and competitive insurance market. The company ranked sixth among the country’s 16 non-life insurers, based on 2023 gross written premium (GWP), with a market share of 5.1%. Victoria’s GWP increased more than three times in 2023, reaching KZT 33.4 billion (approximately USD 77.6 million). The growth was driven by a material motor and property co-insurance arrangement, with Victoria fully ceding the associated risks to a local reinsurer.

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