Fitch has decreased financial stability rating of "Amanat Insurance" JCS insurance company to level "B-", forecast - "negative"

/IRBIS, June 24, 2011/ - Fitch Ratings has downgraded the financial strength rating of the insurer (IFS) JSC "AMANAT Insurance" to level "B-" from "B" and National IFS rating to "B + (kaz)" from "BB" (kaz), announced June 23 the international rating agency. The outlook is "negative". As indicated, the downgrade reflects the weakening of the regulatory capital AMANAT to limit levels and a significant delay in the completion of previously announced capital increase to 360 million tenge. The rating action also takes into account the deterioration in underwriting position of the insurer in 2011. Ratings are supported by capital position of the insurer, risk-weighted, commensurate with the level rating and relatively good liquidity position. In the event of any failure by the insurer to meet prudential requirements, followed by external regulatory intervention, Fitch will consider these events as a key trigger for the decline. In addition, reducing regulatory risk and signs of improved underwriting positions can lead to positive rating actions. As indicated, AMANAT approached the minimum level of solvency margin of 100% at the end of April 2011 and end in May 2011 due to pressure on available and required capital. Required capital of AMANAT rose in 2011 because the regulator has increased the fixed amount of the minimum guarantee fund. Pressure on available capital was due to changes in methodology backup regulator, which came into force in 2011. AMANAT hoped that its shareholder will bring additional KZT 360 million in the fourth quarter of 2010 to support the regulatory capital position of the company. Injection, however, were not completed due to the prolonged transfer of ownership of the insurer on the technical holding companies directly to benefetsiaru. Formalities relating to the ownership, were completed by April 2011, but the shareholder delays capital increase before the end of 2011. The deterioration of underwriting positions of the insurer in 2011 was due to an increase in contributions to reserves for losses end of the first quarter of 2011 by 83%, of which 78% were represented by an increase in reserves for incurred but not reported losses. In the second quarter of 2011 the technical result AMANAT suffered heavy losses in some lines of business. Fitch is concerned about the stability of negative operating cash flows AMANAT, explained that the restructuring of the portfolio in 2009 and first half of 2010, but now seems to be a signal that the insurance activity is recovering slower than expected. At the same time, Fitch notes that the insurer still has a relatively good liquidity position with net technical reserves to be covered relatively liquid local investment assets. [2011-06-24]