Insurance Company Jusan Garant JSC

The higher anchor choice for the ratings is driven by the sustainable market share in the Kazakhstani insurance sector. The negative outlook reflects that Jusan Garant's expected solvency recovery and our capital adequacy assessment may fall short of expectations given the uncertain operating and investment environment the industry faces. We could lower the ratings in the next 12 months if the company's regulatory solvency ratio does not improve to consistently above the required minimum, therefore increasing the risk of regulatory intervention; or our capital adequacy does not recover at least to a strong level by year-end 2023; or if we see a notable deterioration in the average credit quality of invested assets. We could also lower the ratings if Jusan

...We believe Jusan Garant will maintain its sustainable position in the Kazakhstani P/C market in the next two years. We forecast the company's market share by gross premium written (GPW) will remain 6%-7% during this period. We expect Jusan Garant will sustain its capital adequacy at least at the '###' level based on our model, and restore its regulatory solvency margin to 1.5x. The company's regulatory solvency margin dropped from 2.6x as of Dec. 31, 2021, to 0.6x as of April 1, 2022. The primary reason for the solvency deficit is Jusan Garant's exposure to distressed assets in Russia--represented by deposits, government debt, and corporate bonds. Jusan Garant has submitted an action plan to the regulator in which it has committed to restore its solvency margin to 1.3x by the end of 2022, otherwise the shareholder will recapitalize the company to achieve this level of solvency margin. We expect that Jusan Garant will be able to execute the plan in line with the schedule. As of Oct. 1, 2022,...

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