This rating action followed the transfer of control over the insurance company to the brokerage division of business Kazakhstan JSC Freedom Finance by the owner of Freedom Finance Life, Timur Turlov on May 17, 2022.
After changing the ownership structure, the current ratings of LICs and a positive outlook on them were retained, as the rating agency does not expect any pressure on the capital, return or investment portfolio of the company due to the influence of the parent structure. The rating agency believes that Freedom Finance Life's standalone credit profile remain stable.
“We believe the insurance company as part of the holding plays an important role in the implementation of the brokerage company's long-term business development strategy, which involves business diversification within the group. However, we have yet to assess the level of integration achieved between the two companies. A closer relationship with the holding could have a positive impact on the performance of the insurance company as the characteristics of the brokerage company's own credit profile improve,” S&P Global Ratings reports.
The rating agency has a positive view of Freedom Finance Life's (FFL) stable profitability. As of April 1, 2022, the company's return on assets was 9.6%, the return on equity was 66%, and the return on investment was 8.7%.
The agency expects the company's net income to average around KZT5-6bn per annum with a return on equity of 32% and return on assets of 5%. According to the agency's forecasts, FFL's investment return will be about 8-10%, which will allow the company to fulfill its obligations under insurance contracts with an investment component.
“The affirmation of the Freedom Finance Life ratings and the continued positive outlook on them indicate a high assessment of our company's performance in 2021-2022. The current year provides us with new opportunities for the Kazakhstani insurance market’s growth and development. Our team consists of over 200 specialists who create insurance in a new way. Thanks to high-quality, technological service and favorable conditions, the number of those who trust our company is growing rapidly. To date, we have provided insurance coverage to more than 390 thousand Kazakhstanis. And we plan to continue developing and creating the best solutions for people’s confident and secure future,” commented Azamat Yerdessov, the Board Chairman of Freedom Finance Life.
Photos are from open sources.
