Fitch Ratings reaffirmed the 'B+' Insurer Financial Strength (IFS) Rating of Uzbekistan-based Gross Insurance Company. The outlook remains stable. Gross Insurance holds a favourable position among Uzbek insurers due to its diversified business operations and competitive market presence. In 2023, the company shifted focus to motor insurance, which accounted for 41% of its total gross written premiums (GWP), moving away from property and casualty insurance.
On an international level, Gross Insurance operates on a modest scale, with a consolidated Gross Written Premiums (GWP) of UZS 509 bn (about $43mn) in 2023. However, it is a significant player domestically, with a market share of 5.8%, making it the fourth-largest insurer in Uzbekistan.
Gross Insurance's capital position, as measured by Fitch's Prism Factor-Based Model (FBM), was below 'Somewhat Weak' at the end of 2023. This was due to high asset risks from its investment portfolio and growth strategy. The regulatory solvency margin improved to 118% at the end of 2023 and 122% at the end of 1Q24, driven by profit reinvestments. Fitch expects continued improvement in the solvency margin through further profit reinvestments.
The company's return on equity (ROE) increased to 23.5% in 2023, up from 6.0% in 2022, due to better non-life underwriting results and favourable exchange rate dynamics. The average ROE from 2020 to 2023 was 22.6%. However, the rating also considers the volatility of financial results and foreign exchange gains.
Gross Insurance primarily invests in fixed-income instruments, such as bank deposits with state-owned and large private local banks. Fitch believes that Gross Insurance's investment portfolio is of higher credit quality and more diversified compared to other local peers.
Similar to its regional counterparts, Gross Insurance faces significant exposure to catastrophic events. The company does not model for catastrophe risk, making its capital vulnerable to substantial unforeseen losses.
The removal of tax incentives for life insurance products in April 2023 led to a 79% drop in premium volumes for Gross Insurance's life insurance subsidiary. Consequently, the company requested the withdrawal of its life insurance license in May 2024, though it remains obligated to honour existing contracts.
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