S&P improves Freedom Insurance rating to BB-

S&P, an international rating agency, has upgraded the rating for Freedom Insurance (a subsidiary of Freedom Holding controlled by Kazakhstani businessman Timur Turlov) from B+ to BB with «stable» outlook. According to the national Kazakhstani scale, the rating has been improved from kzBBB+ to kzA-. The rating upgrade followed improvements in the company’s operational and financial results.

The rating agency highlighted the company’s strong insurance underwriter performance (risk assessment), which aligns with the market average and is on par with higher-ranked companies. Analysts support this assessment with key figures: in 2023, the company’s return on equity (ROE) reached 38%, while its combined ratio was 85%. These results exceed the Kazakhstani general insurance sector averages of 12.8% for ROE and 89% for the combined ratio. Additionally, from January to September, the company recorded a combined ratio of 76% and an ROE of 48.3%.

S&P reports that the company’s growth and business expansion are driving its strong financial indicators. The agency also emphasizes measures undertaken by Freedom to enhance underwriting practices, strengthen risk mitigation and increase control. Analysts believe that, in the mid-term, the insurance company will sustain high profitability and solid capital levels. Notably, its capital rose from $47 million to $66 million in the third quarter.

«Profitability in 2025-2026 will align with that of comparable domestic companies and the average figures of Kazakhstan’s general insurance market. Capital sufficiency is expected to remain at 99.8% based on our capital model, supported by revenue from both investment and insurance activities,» the analysts stated.

Furthermore, they foresee the loss ratio to stay at 90% until 2026, whereas the average market figure is somewhere between 90% and 93%, ROE is expected to be at 30% to 35% and the revenue profitability will exceed 20%. However, analysts do not expect any dividend payouts as «the company aims to take full advantage of the current market opportunities.» They also note that such a high tempo of business growth may place pressure on capitalization.

S&P added that it can improve the rating if the capital sufficiency exceeds 99.95% over the next year, operational indicators outpace those of more successful entities and the company successfully implements its business plans and growth strategy.