AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb” (Fair) of Uzbekinvest Export-Import Insurance Company JSC (Uzbekinvest) (Uzbekistan).

The Credit Ratings (ratings) reflect Uzbekinvest’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.

The revision of the outlooks to stable from negative reflects improvement in the company’s risk-adjusted capitalisation. This is due to increased sophistication of the company’s exposure measurement of probable maximum loss. A revised assessment of the company’s exposure to a 1-in-250 earthquake event, supported by third-party analysis, has resulted in a stronger Best’s Capital Adequacy Ratio (BCAR).

Uzbekinvest’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by BCAR. AM Best expects the company’s BCAR scores to remain above the minimum required for the strongest assessment level, with a sufficient buffer to absorb potential shock losses. In addition, the company has a relatively conservative investment allocation strategy, with approximately half of its investments held in bonds and other fixed income securities outside of Uzbekistan, which are predominantly of excellent credit quality. Offsetting factors include the company’s relatively unsophisticated capital management capabilities.

The marginal operating performance assessment considers Uzbekinvest’s high combined ratio, with a five-year (2018-2022) weighted average of 107.2%, as calculated by AM Best. Whilst the non-life loss ratio is low, overall underwriting results are negatively affected by Uzbekinvest’s high expense base. For 2023, the underwriting results are expected to improve due to the company achieving greater economies of scale, combined with better results produced by its foreign book of business as compared with its domestic portfolio. However, the sustainability of these improvements is yet to be demonstrated.

Uzbekinvest’s limited business profile assessment reflects its leading market position in the small, albeit growing, Uzbek insurance market and nascent competitive position in its overseas markets. Over the past three years, the company significantly grew its inward reinsurance portfolio, which accounted for more than 50% of gross written premium in 2023 and is primarily written outside of Uzbekistan. The company has since slowed the growth of its foreign portfolio, recognising the risks of international reinsurance market exposure.

Uzbekinvest is majority owned by the Ministry of Investments and Foreign Trade of the Republic of Uzbekistan. The company’s leading domestic market position and the relative independence of operations from the state mean that no lift or drag is applied to its ratings.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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