A.M. Best affirms rating of PASHA Insurance

A.M. Best affirms rating of PASHA Insurance The rating reflects PASHA Insurance's strong operating performance and solid business profile in domestic market
Finance
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January 23, 2017 11:22
A.M. Best affirms rating of PASHA Insurance

Baku. 23 January. REPORT.AZ/ A.M. Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of "bbb-" to Azerbaijan's PASHA Insurance OJSC. Report informs, the outlook assigned to these Credit Ratings (ratings) is stable. PASHA Insurance is a wholly owned subsidiary of PASHA Holding LLC, a diversified group also based in Azerbaijan.

The ratings reflect PASHA Insurance's strong operating performance, supportive level of risk-adjusted capitalisation and solid business profile in its domestic market. The ratings also consider PASHA Insurance's exposure to the heightened country risk in Azerbaijan and a material concentration risk in its underwriting portfolio.

PASHA Insurance's operating performance is strong, as demonstrated by a five-year weighted average combined ratio of 89% and a return on capital and surplus of 15.3% (2011-2015). Performance has benefited from a relatively low level of loss activity in Azerbaijan compared to more mature insurance markets, 

in addition to the country's high interest rate environment. Additionally, PASHA Insurance has recorded significant foreign exchange gains following the depreciation of the Azeri manat in 2015 and 2016. However, prospective performance is likely to be negatively affected by the deteriorating economic conditions in Azerbaijan and the company's plans to expand into market segments where it has limited expertise.

"A.M. Best expects PASHA Insurance's risk-adjusted capitalisation to be maintained at a supportive level for its ratings in the medium term, underpinned by its relatively large and under-utilised capital base and good quality reinsurance protection. 

Factors that negatively affect PASHA Insurance's balance sheet strength are the company's high dividend policy and its weak investment risk profile, given the high financial system risk in Azerbaijan. PASHA Insurance recognises its asset risk exposure and is taking steps to address this by revising its investment guidelines and exploring investment opportunities abroad. A.M. Best will continue to monitor the company's investment risk profile and its asset and liability management". the agency says. 

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