KAZAKHSTAN: S&P: Life insurers to continue to see double-digit GWP growth in 2021

24 February 2021 — Marina MAGNAVAL
"S&P Global Ratings continues to positively assess growth prospects in the life insurance sector in 2021, which is supported by a number of regulatory initiatives and GWP increase from a low base in the past few years", says Ekaterina TOLSTOVA, Deputy Director of the Financial Institutions Group, S&P Global Ratings.

Despite the restrictive measures and difficult economic situation in 2020, life insurers in Kazakhstan showed stability, good results, GWP growth was about 16%, "which is within the baseline scenario of S&P Global Ratings and is higher than the indicators of non-life companies in Kazakhstan". Return on equity (ROE) and return on assets (ROA) ratios were about 39% and 7% in 2020, respectively, higher than the average ROA and ROE of life insurance companies over the past three years - 30% and 3.4%, respectively.

S&P Global Ratings noted that such results of life insurers were possible due to insurance and investment activities, and in 2021 the trend "towards double-digit GWP growth (over 15%) will continue underpinned by the regulatory changes, including those related to legislative amendments on pension annuities, already introduced tax benefits for insureds, improvement of the macroeconomic situation, increased purchasing power of individuals and revival of economic activity", Ekaterina explained.

The rating agency expects leading companies to maintain their positions in the market in 2021, but the concentration of the TOP-3 will decline (72% in 2019, 70% in 2020), as other players are expanding their market shares. S&P Global Ratings believes that the life insurance market has growth potential - insurance penetration is still low (less than 1% of GDP), companies are taking measures to raise awareness of insurance products, life insurance products have a higher investment return compared to bank deposits.

Overall, S&P Global Ratings believes that the situation remains more favorable for life insurers than for the non-life sector, and "the majority of Kazakhstani insurance companies, who have the agency's ratings, are well placed to withstand the impact of the COVID-19 pandemic, thanks to their capital stock and liquidity", added Ekaterina.

Source: Delovoy Kazakhstan



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