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Rakhim KADYROV: "Hope that the insurance industry in Kazakhstan will move to a new level"

KadyrovLast year, the insurance market has shown considerable growth in spite of pessimistic expectations, and forecasts of some participants and experts. We asked Rakhim KADYROV, Chairman of the Board of Directors of JSC Insurance Company Amanat Insurance, to comment on reasons for this growth and development prospects for the near future of the both insurance sector and country's financial system.

- What are your company's last year performance results?

- According to the 2010 performance results, Amanat Insurance is among top 10 companies for the premium collection. It should also be noted that during last year level of insurance market concentration for the 5 largest companies has significantly decreased and amounted 37,5% of premiums collected. Earlier, this figure exceeded 60%. But what does this mean? Redistribution of the market? Well, yes to some extent. However, significant market growth by 23,5% compared with last year shows that confidence to insurers strongly affected by the crisis is finally restoring. This opens up great prospects for such universal company as "Amanat Insurance" - company that provides wide range of services to both corporate and individuals, while being independent of banking business and having an extensive branch and agency network. Another important indicator is that company has received international "B" ranking for the financial sustainability and national "BB (kaz)" with the 'stable' outlook assigned by the rating agency "Fitch Ratings".

- Last year's insurance sector's results are normal, although the forecasts of market participants were not optimistic. What might be insurance market dynamics this year?

- Kazakh insurance market is undergoing a period that all emerging markets usually go through. The crisis has certainly made everyone to think and work on mistakes and to build up appropriate priorities. The emphasis should be made on creating specific conditions to minimize risks, prevent defects and factors of instability, which is very clearly reflected in the Presidential Decree on the Concept of financial sector development in post-crisis period.

Compared to the IMF forecasts of the global economic growth slowing to 4%, our expectations of the insurance market growth may seem rather optimistic. However, growth of GDP, overall income growth, entry into the Customs Union will all contribute to the revival of this sector.

Demand for the insurance in Kazakh economy is quite high. Trustworthy insurance companies, with transparent business, perfect system of risk management, high level of service, active and mobile management are just doomed to success.

I hope that the insurance industry in Kazakhstan will move to a new level and reach a significant proportion of the country's GDP.

- Considering your banking experience in the country's leading banks and unstable situation in the banking sector, what can you say about further development of captive insurance companies within the banking groups?

- Captives concept is rather ambiguous, so I propose, with your permission, to restrict to the term "affiliation". First of all, it should be noted that the financial sector directly depends on its customers, and any changes in the global economy will affect financial condition of banks' customers, and hence their affiliated insurance companies. Also, I would not describe current situation in the banking sector as instable, because despite the earlier decline in the financial industry, situation is currently stabilizing - Russian banking capital is lately actively represented at Kazakhstan's "arena", and the regular support of the Government of the Republic of Kazakhstan also greatly stimulates the recovery of the banking sector. Today risk management system is strengthening and this will soon have a positive impact on the quality of bank loan portfolios, and as a consequence on the growth of premiums of the insurance companies affiliated with these banks. The choice of the insurer in any case will remain with the client, this will be largely determined by the quality of the insurance services provided. With rational planning, adequate tariff pricing and improvement of the quality of service, we can confidently expect about the systematic positive development of the both insurance and financial markets.

- How would you evaluate overall situation in the financial system? What problems need to be addressed here in the first place?

- I think I have already answered this question to some extent earlier. I can only make a few additions. In particular, problems in any sector of the economy existed and will exist, providing a stimulating effect. I would also like to note that at the moment the engine of the financial system are primarily banks. In the case of a radical change in the way of assessing risks of investing in businesses, primarily in small and medium businesses, we can obtain the gradual development of this area. In fact today most investors (banks, investment companies, venture capital funds, private investors) are interested in already well-established businesses, mainly focused on heavy industry, energy and oil and gas industry. Generally, the question is quite fundamental, and if the inflow of investments in medium-sized businesses will be developed to the extent needed, supported by the clear understanding of the system of checks and balances, then positive results will not keep you waiting. In this case insurance sector will also win, which is of great importance for us.

- What would you like to wish journalists writing on financial topics and visitors of our website?

- I would like to wish everyone good health and prosperity, optimism, despite the tough times, interesting speakers and millions of readers!

3 2011 | View: 1 979 | | Printint version
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