AM Best has downgraded Trust Insurance (Uzbekistan)'s financial strength rating to 'C- '(Weak) from 'C+' (Marginal) and the Long-Term Issuer Credit Rating to 'ccc-' (Weak) from 'b-' (Marginal). The outlook of these credit ratings is 'Stable'.
Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in the rating process.
According to a statement by AM Best, ratings reflect Trust Insurance’s balance sheet strength, which the analyst has assessed as weak, as well as its adequate operating performance, limited business profile and weak enterprise risk management (ERM).
The rating downgrades follow the revision of Trust Insurance’s balance sheet strength, which reflects the deterioration of the company’s risk-adjusted capitalisation to the very weak level as at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). This was driven by the company’s rapid premium growth and significant increase in its reported reserves, as well as the substantial investment concentration and has highlighted shortcomings in its corporate governance.
The balance sheet strength assessment also considered the company’s asset quality, which is constrained by the elevated financial system risk associated with Uzbekistan, where the company’s assets are concentrated.
AM Best also noted that Trust Insurance is expected to build a track record of adequate operating performance as it executes its business plan. Although the technical profitability in the initial years of operation was challenged by the company’s start-up nature, Trust Insurance reported positive underwriting results in 2024, as illustrated by the net combined ratio of 92% (as calculated by AM Best).
AM Best expects the company to grow its earnings and maintain positive technical profitability over the business cycle, notwithstanding the execution risk associated with its planned scale-up.
Trust Insurance is a relatively new player in the highly competitive Uzbekistan market, focussing on non-life business. Despite significant growth in recent years, the company remains small, with the company reporting gross written premiums of approximately UZS150bn ($12m) in 2024.