Baku. 23 December. REPORT.AZ/ Fitch Ratings has downgraded AzInsurance OJSC's Insurer Financial Strength (IFS) rating to 'B' from 'B+'. The outlook is stable.
Report informs, downgrade reflects AzInsurance's weakened business profile and Fitch's expectations that this will not recover significantly in 2017.
The downgrade also reflects the company's sharply lower operating profitability in the third quarter of 2016 and continuing high investment risk. The rating also takes into account the company's practice of very high profit distributions to the shareholder.
In 9M16, AzInsurance's total gross written premiums (GWP) decreased by 34% compared with third quarter of 2015 in the context of the worsened macroeconomic environment in Azerbaijan. The company faced a double-digit contraction in GWP in the most profitable line in its portfolio, cargo, with the share of cargo insurance plummeting to 4% of the portfolio in third quarter of 2016 from 28% in 9M15. Total GWP also fell by 11% in 2015 and 13% in 2014.