According to the rating agency, the upgrades reflect stronger evidence of government propensity to support SIOT through guaranteeing compulsory lines, and as evidenced by high reputational risks for the authorities in case of SIOT failure.
Fitch notes that SIOT is fully owned by the government of Turkmenistan (BB-/Stable) and the rating agency expects the government to be able and willing to support the company. This is based on legislation establishing government backing for SIOT's compulsory insurance obligations, and SIOT's position as the sole authorised provider of compulsory insurance in Turkmenistan. Combined with SIOT's dominant market share, strategic importance to the national insurance sector, and potential reputational risks to the government should SIOT default on its obligations, this results in a two-notch uplift from the standalone credit quality assessment of 'b-' to an IFS Rating of 'B+'.
SIOT is Turkmenistan's largest and only state-owned insurance company, with a dominant market position of 60% in 9M25 (2024: 86%; 2023: 92%). The decline reflects rapid growth in financial risks insurance, a high-risk segment SIOT has deliberately avoided, which is reflected positively in Fitch's assessment of the company's business risk profile.
The insurance sector in Turkmenistan is marked by limited transparency and public disclosure. Reporting practices are restricted, limiting public insight into the financial position and performance of Turkmenistan's insurance companies. Local accounting provides only limited transparency on important financial areas such as capital structure and expenses. The low financial transparency of SIOT negatively affects Fitch’s assessment of its company profile, the agency added.
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