Being young and in demand, the LIC market is expected to grow faster than other financial institutions. For example, over the past five years, the average growth rate of LIC assets has been 27.7%, while for second-tier banks it has been only 9.4%, and general insurance companies - 13.2%.
Nomad Life is leading among life insurance companies in terms of assets with 249.2 billion tenge. The company forms 31.5% of the market. Besides, the company also ranked first in terms of asset growth for the month: plus 9 billion tenge. The fact that the positive trend for the company is unchanged, despite the crisis and geopolitical uncertainty in the world, speaks of the company’s stability and reliability. It is worth noting: the National Bank’s statistics does not reflect the funds of clients managed by life insurance companies (Unit-linked product), which only Nomad Life has.
The second place in terms of assets is taken by Halyk-Life, a subsidiary of the largest bank in the country, Halyk Bank, with 237.4 billion tenge, or 30% of the market.
Freedom Finance Life is closing the TOP-3 with 90.1 billion tenge, or 11.4% of the market. Thus, the TOP-3 companies form almost 73% of the entire market.
In terms of asset growth for the month, KM Life (plus 2 billion tenge) and Centras Kommesk Life (plus 1.3 billion tenge) follow Nomad Life.
Life insurance companies in the Republic of Kazakhstan not only provide standard insurance products today but also allow making deposits for the future similar to bank deposits. In such conditions, the issues of organizations’ reliability and sustainability, as well as payment guarantee come to the fore.
However, the legislation of the Republic of Kazakhstan provides for risks, besides, historically, life insurance companies are more stable than other participants in the financial market, and Kazakhstan is no exception. Thus, during the years of the state existence, 136 banks and 35 general insurance companies were liquidated in the financial market of the Republic of Kazakhstan. As of early April 2022, 9 banks and 2 general insurance companies are undergoing bankruptcy proceedings. However, in the entire history of the life insurance industry in the Republic of Kazakhstan, only one company JSC LIC Valut-Tranzit Life was liquidated, the reason being the liquidation of the parent bank JSC Valut-Tranzit Bank.
Another critical point is participants in life insurance market are evaluated by international rating agencies. Thus, the largest company in the sector Nomad Life has a credit rating from Standard & Poor's (S&P) at the level of “BB+”, its rating outlook is Stable. The national scale rating is “kzAA”. Such ratings are considered high even in comparison with second-tier banks of the Republic of Kazakhstan without state participation.
The National Bank of Kazakhstan, in its turn, is a member of the International Association of Insurance Supervisors (IAIS), which means that the regulator carefully controls the activities of insurance companies. In accordance with law, each insurance company is obliged to cover its risks with another insurance company, most often a foreign insurance company with a high international rating. One insurer is reinsured with the help of another insurer, and thus the insurance coverage on term and endowment insurance programs is guaranteed to be paid to all the insured.
It can also be noted that, according to the Tax Code of the Republic of Kazakhstan, contributions under endowment agreements are not subject to income tax, which means that such product user saves 10%. Besides, the funds are protected by confidentiality of deposits. They cannot be confiscated and they are not subject to division in a divorce.
Photos are from open sources.