The total assets of Kazakhstani insurance companies have decreased by 8.9 billion tenge in February, but since the year beginning the dynamics remains positive. Thus, the assets have increased by 2.1% or 22.6 billion tenge, to 1,071.1 billion tenge for the first two months of 2019. The assets of insurance companies increased by 123.2 billion tenge (+ 13.3%) last year. Decline in assets in February was also attributed to Standard Insurance Company’s revocation of license and Eurasia Insurance Company’s significant cash outflows. As of the year beginning the share of securities in IC assets has increased from 51.9% to 52.8%, while the share of deposits and cash has decreased from 22.0% to 19.3%.
However, the assets of life insurance companies (LIC), after increase by 20.0% in 2018, have grown by 0.5% in the first two months of 2019 to KZT 331.4 billion. Thus, the share of LICs has decreased from 31.4% to 30.9%.
The decrease in actuarial reserves of Kazakhmys Insurance Company remains the most significant among the entire sector; they dropped by 3.1 billion tenge or 16.1%from the year beginning. As for actuarial reserves of the entire sector have decreased by 1.1 billion tenge in February, but, since the year beginning they show an increase of 27.9 billion tenge. The leaders in the actuarial reserve growth as well as in terms of assets this year are Eurasia and Halyk, plus 10.8 and 10.5 billion tenge, respectively. The reserves of LICs for two months have increased by 2.2% to 272.0 billion tenge. Let us remind you, that 77.9% increase in reserves of the sector in 2018 accounted for LICs - plus 45.9 billion tenge.
The equity capital of insurance companies is decreasing as players leave the market. The licenses of three companies: Kompetenz, Salem and Standard have already been revoked this year. The equity capitals of these companies by the year beginning were 5.9 billion tenge. However, this reduction will be partially offset by the entry of Eurasia LIC in the market, which will be taken into account in the NBK's financial statements next month. Based on the requirements for the minimum permissible capital under the Law of the Republic of Kazakhstan “On Insurance Activities” in life insurance and reinsurance sector, the equity capital of Eurasia LIC is 5.4 billion tenge.
The volume of insurance premiums increased in comparison with the same period last year by 18.8% to 91.9 billion tenge. However, the volume of attracted premiums as of February was lower compared to January by 57.5%. In January 2019 the gross premiums amounted to 64.5 billion tenge, while the sum of net premiums was 46.0 billion tenge. 60.8% of all sector premiums this year were attracted by two companies: Eurasia (28.1 billion tenge) and Halyk (18.4 billion tenge). Since the year beginning the volume of attracted LIC premiums amounted to 22.7 billion tenge, which is 62.4% higher than in January-February 2018. The share of LICs in insurance has increased from 18.1% to 24.8%.
The insurance payment costs in January-February 2019 have amounted to 17.6 billion tenge, which is 17.6% higher compared to the costs for the same period in 2018. Let us remind you, that the total costs on insurance payments in 2018 amounted to 95.2 billion tenge. The payments on all insurance types are growing. However, due to reinsurance, the net amount of insurance payments has increased only by 8.5% to 15.8 billion tenge. Six life insurance companies made payments in the amount of 3.1 billion tenge, which equals to 17.4% of all sector payments.
Insurance companies continue to show a profit markup in 2019. Thus, according to the National Bank, the sector profit for two months amounted to 10.3 billion tenge increasing by 66.8% over the same period last year. However, the profit of five largest companies in terms of assets amounted to KZT 10.0 billion or 96.9% of the entire sector profits. The sector’s return on assets for two months amounted to 1.0%, and return on equity was 2.2%.
Diagram 1. Assets of insurance companies. Source: NBK.
Diagram 2. Insurance premiums by insurance type, (billion tenge). Source: NBK.
Diagram 3. ROE of insurance organizations. Source: NBK.
Table 1. Sector characteristics. Source: NBK.