Forecast of AzSigorta Financial Stability Reduced to Negative Level

The long-term and medium-term ratings of AzSigorta has maintained at 'B +', but the financial stability outlook lowered from stable to negative levels.

As the Fitch Ratings report says, these actions are linked to a lowering of Azerbaijan's sovereign rating to «BB +» with a negative outlook. Real gross domestic product, according to analysts, this year will be pressed down by 3.3% while reducing the non-oil spheres by 4%, and the reason for that – cutting the government spending, suspension of bank lending, and reduced confidence and purchasing power.

The restriction of the insurance sector has been affected by the two-time devaluation of the manat, which could put pressure on the profitability of the financial sector. Given the low capacity of the local insurance sector and its high dependence on reinsurance abroad it may be difficult to pass the increased costs on the external reinsurance in full.

However, the devalued national currency helped AzSigorta generate significant foreign exchange gain, and 69% of its portfolio in dollar instruments placed at the end of 2015.

The JSC income increased to 17 million AZN against the background that in absolute indicator the policies sold decreased by 11%. --17D-