AZERBAIJAN: PASHA Insurance outlook revised to positive, BB ratings affirmed

26 February 2024 — Marina MAGNAVAL
In February S&P Global Ratings revised its outlook on PASHA Insurance (the market leader) to positive from stable. At the same time, the agency affirmed its 'BB' long-term issuer credit and financial strength ratings on the insurer, the rating agency reported.

According to S&P Global Ratings, PASHA Insurance's capital adequacy strengthened within the satisfactory level, it was marginally above the 99.8% confidence level in 2022, and the agency forecasts it to remain at these levels in the next two years. This reflects the expectation of 10%-15% premium growth in 2024-2025, in line with the market average, high profitability with return on equity exceeding 30% and retention of net profit of up to 20%-25%, the report says.

The agency experts expect that PASHA Insurance's funding profile will remain neutral. PASHA Insurance will maintain its strong competitive position in Azerbaijan's P/C insurance market in the next two years. PASHA Insurance is the clear market leader, benefiting from its expertise, brand awareness, and diversified business mix. It also benefits from strong distribution networks that facilitate direct sales. With AZN 293 million (approximately USD 172 million) of gross premiums written expected in 2023 based on local accounting standards, PASHA Insurance ranks No. 1 in the country's P/C market. It has about a 49% market share in 2023 (up from 46% in 2022), S&P Global Ratings expects the company to maintain it over the next two years.

Nevertheless, country- and industry-related risks weigh on PASHA Insurance's business risk profile, given the pressured economy, low P/C insurance sector penetration, moderate growth prospects, and still-developing sector regulations, the agency noted.