Press Release - JANUARY 30, 2020
AM Best Upgrades and Withdraws Credit Ratings of Nomad Insurance Company JSC
FOR IMMEDIATE RELEASE
LONDON - JANUARY 30, 2020
The ratings reflect Nomad Insurance’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and weak enterprise risk management.
The rating upgrades reflect an improvement in Nomad Insurance’s balance sheet strength. During 2019, the company enhanced the credit quality of its fixed-income portfolio and introduced a formal dividend policy. Prospective dividend payouts are likely to be relatively onerous. Nevertheless, risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is expected to be maintained at least at a very strong level, supported by positive operating results and a lower investment risk profile.
Nomad Insurance has a track record of positive, albeit volatile, operating performance, with a five-year weighted average return on equity of 20.6% and a combined ratio of 101.8% (2014–2018, based on audited accounts under IFRS). Performance has benefited from a relatively low level of loss activity and Kazakhstan’s high interest rate environment. However, technical results have been pressured somewhat by high acquisition and management costs. In 2019, based on unaudited financial statements prepared under local accounting standards, the company achieved some economies of scale and was able to reduce its expense ratio, resulting in a combined ratio of approximately 80%.
Nomad Insurance has an established business profile in Kazakhstan. Based on regulatory returns as of Jan. 1, 2020, Nomad Insurance ranked as the fourth largest non-life insurer in the country (out of 20 market participants), with gross written premium (GWP) of KZT 24.6 billion. Negatively affecting AM Best’s assessment of the company’s business profile is its highly concentrated underwriting portfolio, by geography and line of business, with a significant share of GWP derived from the motor third-party liability segment.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.