Fitch noted the company's strong capital position, sound underwriting profitability and adequate investment quality. The negative outlook is reflecting "very high dependence on outward reinsurance coverage purchased abroad, which may expose the insurer's underwriting result and capital to higher foreign currency (FC)-driven volatility due to the economic implications of the coronavirus pandemic", the agency explained.
For the 9 months of 2020 that have passed, Kazakhmys reported an 18% decline in GWP, but a 55% growth in net written premiums, which reflects the nascent restructuring of the insurer's portfolio towards less reinsurance-demanding risks and higher levels of net retention. At the same time, the company remains a commercial lines-focused insurer with a significant dependence on a single customer - Kazakhmys Corporation LLC (73% of GWP in 2019). Nevertheless, the size of the related-party business makes Kazakhmys one of the largest local commercial underwriters, Fitch emphasized.
In the first half of 2020, Kazakhmys ranked 6th in the insurance market of Kazakhstan in terms of GWP volume among 28 active insurers. The company is keeping its position in the ranking, if compared to 1H2019, despite that its market share dropped by more than 1% y-o-y to 3.56%.