TASHKENT

Fitch Ratings has upgraded Uzbekistan’s AGROS HAYOT Joint-Stock Insurance Company’s (Agros Hayot) Insurer Financial Strength (IFS) rating to ‘BB-‘ from ‘B+’ with a Stable outlook.

Agros Hayot was founded in 2016 by Uzagrosugurta Joint-Stock Company. The company was established to add life products to the group’s business mix, allowing the group to benefit from the rapid growth of life insurance in Uzbekistan which followed the strong tax incentives given to individuals investing in life insurance policies. These tax incentives meant Uzbekistan’s life insurance sector grew tenfold between 2016 to 2019, as measured by premiums written.

The tax reforms of 2019 significantly reduced tax-saving opportunities for life policyholders. This has driven Uzbek life insurers, including Agros Hayot, to try and refocus their strategy on other products.

“The upgrade reflects Fitch’s revised view of Agros Hayot as a ‘Core’ subsidiary to its 100 percent parent state-owned Uzagrosugurta JSC (BB-/Stable),” Fitch said in a report. “As a result of this assessment of strategic importance, the IFS Ratings of Agros Hayot’s IFS rating is now aligned with Uzagrosugurta’s at ‘BB-‘.”

First, Agros Hayot is now deemed an integral part of Uzagrosugurta in supporting the implementation of the latter’s development targets, according to a government decree. This is despite Agros Hayot not being formally listed in the list of strategic state-owned companies that the Uzbek state has committed to support and develop, whereas Uzagrosugurta is on the list.

In particular, Agros Hayot has been made part of Uzagrosugurta’s transformation road map as per a Presidential decree issued in October 2020 aimed at modernising major state-owned companies in areas such as transparency and governance, in various sectors of the economy. To comply with the transformation requirements for its parent, Agros Hayot has recently changed its legal form to a joint-stock company from a limited liability company.

“Fitch understands from management that the government has significant influence over Agros Hayot’s key corporate decisions, which are taken at the level of Uzagrosugurta’s supervisory board, including six representatives of the local cabinet of Ministers and various government bodies and one independent director,” the agency said. “Agros Hayot also intends to play a prominent role in the provision of insurance coverage for Uzbekistan’s migrant labour force, a recently government-enforced line of business.”

Fitch said that its view was supported by a strong history of support, synergies through the offer of a full range of non-life and life products to the same franchise base, subsidiary’s material size relative to the whole group and unlikely divestiture of the subsidiary despite its weak operating performance.