“We are pro privatizing of the State Annuity Company, but for this the right time should be found. Now the share of life insurance in the gross domestic product of Kazakhstan is only 0.15%, while in developed countries it is 5% in average, in emerging markets - 1.7% in average. Of course, it is possible to privatize even now, but it is better when this share overcomes the psychological mark of 1%,” Y. Burabayev commented to KazTAG that the issue of SAC privatization could be reconsidered.
In his opinion, the overall issue of privatization of state assets is quite important. “However, the participants of life insurance market have expressed the opinion that SAC privatization is premature,” the expert noted.
“The state annuity company, - continues Y. Burabayev, - now plays the role of the insurance market stabilizer, the life insurance segment, in particular.”
“Therefore, SAC is a pivotal company, which is designed to ensure the stable development of the entire life insurance market in accordance with the Law of the Republic of Kazakhstan “On Insurance Activities”. According to the law, SAC is assigned the obligation to take on its balance sheet portfolios of liquidated insurance companies if private insurance companies have not expressed a desire to accept them,” explains the expert.
When asked whether SAC performs the same functions as the Kazakhstan Deposit Insurance Fund in the banking sector, Y. Burabayev answered negatively. "Absolutely not. There is the Insurance Payments Guarantee Fund (IPGF - KazTAG) on the market, but its assets in the life insurance segment are insignificant. Therefore, the Fund is not capable to fully cover for SAC, if it is privatized,” the expert admitted.
“To be more precise, SAC performs a stabilization function when it comes to the life insurance segment. If we privatize it now, there will be a gap that can’t be covered,” states Y. Burabayev.
To the question: when the Insurance Payments Guarantee Fund will be able to take over the functions that SAC is currently performing, he could not give a simple answer. “This issue requires a more global thought. The key factor is the growth of the entire insurance market in general, and not its individual segments, in particular. Now, I confess, a rather positive trend in the market can be observed. By the end of 2017, the life insurance segment in Kazakhstan grew by 25%, and over the past period of 2018 a very decent plus was recorded. Thus, the time when SAC can be privatized is approaching faster than it seems to you,” concluded Y. Burabayev.
On December 4, KazTAG announced that the issue of privatization of the State Annuity Company of Kazakhstan may be revised.
In early October, State Property and Privatization Committee of the Ministry of Finance of the Republic of Kazakhstan announced its readiness to hold a tender for the privatization of SAC. That is when the exact tender date and the participation terms were announced. In particular, the starting price of T6.6 billion and guarantee fee of T72.15 million were named.
Earlier, in February, the committee canceled the sale of SAC shares. Then the starting price was T5.2 billion, and the guarantee fee - T72.1 million.
Source: KazTAG Agency