Fitch Affirms Alliance-Life at IFS 'B'; Withdraws Ratings

Wed Mar 12, 2014 11:11am EDT

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(The following statement was released by the rating agency) MOSCOW/LONDON, March 12 (Fitch) Fitch Ratings has affirmed Kazakhstan-based IC Alliance-Life Insurance JSC's (Alliance-Life) Insurer Financial Strength (IFS) Rating at 'B' and its National IFS Rating at 'BB(kaz)' with Negative Outlooks. Fitch has simultaneously withdrawn the ratings. KEY RATING DRIVERS The ratings reflect Alliance-Life's track record of negative operating performance; its portfolio concentration on annuity contracts (71% of gross written premium in 2013), which limits the insurer's risk diversification and exposes it to longevity and interest-rate risks; and its adequate capital position. The Negative Outlook reflects Alliance-Life's high vulnerability to recent unfavourable changes in the Kazakh regulatory landscape, affecting pension annuities and workers' compensation (WC), both key lines for the insurer. Since 2Q13, Kazakh life insurers have been unable to sell pension annuity products due to regulatory changes. In addition, WC has experienced a sharp increase in disability claims frequency in the last two years, reflecting the unfavourable claims regulation for the line. If the regulatory landscape does not improve, Fitch would expect Alliance-Life to remain unprofitable in 2014. The insurer would then be increasingly reliant on shareholder support. Fitch has withdrawn Alliance-Life's ratings as the company has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for Alliance-Life. Contact: Primary Analyst Dmitri Zalesskiy Associate Director +7 495 956 5570 Fitch Ratings CIS Limited Valovaya Street, 26 Moscow Secondary Analyst Anastasia Litvinova Director +7 495 956 7082 Committee Chairperson Harish Gohil Managing Director +44 20 3530 1257 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available on www.fitchratings.com. Applicable criteria, 'Insurance Rating Methodology', dated 13 November 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Insurance Rating Methodology here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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