AM Best Information Services

JANUARY 16, 2020 12:08 PM (EST)

AM Best Withdraws Credit Ratings of PASHA Insurance OJSC

 Elena Abramova
Financial Analyst
+44 20 7397 0321

Catherine Thomas
Senior Director, Analytics
+44 20 7397 0281

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - JANUARY 16, 2020 12:08 PM (EST)
AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of PASHA Insurance OJSC (PASHA Insurance) (Azerbaijan). Concurrently, AM Best has withdrawn these Credit Ratings (ratings) as the company has requested to no longer participate in AM Best’s interactive rating process. PASHA Insurance is wholly owned by PASHA Holding LLC (PASHA group), a diversified investment holding group in Azerbaijan.

The revision of the outlooks to stable reflects an improvement in PASHA Insurance’s balance sheet strength and AM Best’s expectation that the company’s risk-adjusted capitalisation will remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by improvements in its capital management and enterprise risk management (ERM) capabilities. PASHA Insurance significantly increased its non-proportional reinsurance protection in 2019 to mitigate catastrophe risk.

The ratings reflect PASHA Insurance’s balance sheet strength, which AM Best categorises as strong, as well as its strong operating performance, limited business profile and marginal ERM.

PASHA Insurance’s balance sheet strength is underpinned by its risk-adjusted capitalisation at that strongest level, supported by moderate underwriting leverage and a relatively conservative investment strategy. Factors that negatively affect the company’s balance sheet strength assessment are its high dividend payout ratio, which limits growth of its capital base, its significant exposure to catastrophe losses and the high financial system risk in Azerbaijan.

The company’s strong operating performance is demonstrated by a five-year weighted average combined ratio of 83.2% and return on capital and surplus of 23.5% (2014–2018). Over this period, earnings benefited from a low level of loss activity in Azerbaijan, as well as the high interest rate environment in the country. In 2018, the company generated a strong net profit of AZN 21.5 million (approximately USD 12.7 million). Prospective performance may be subject to volatility due to the challenging market conditions in Azerbaijan.

PASHA Insurance maintains a solid competitive position in Azerbaijan’s small and underdeveloped insurance market, supported by its affiliation with the PASHA group and its established business relationships with large commercial customers. However, there is material concentration risk in the company’s underwriting portfolio, with a single group medical client accounting for approximately one third of the company’s gross written premium.

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 provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
046361 PASHA Holding LLC
095015 PASHA Insurance OJSC