28 November 2020

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10 Dec  2019 1344

Moody’s upgrades Uzbekinvest's local currency insurance financial strength rating to Ba3 from B1; outlook stable

The upgrade of Uzbekinvest's LC IFSR to Ba3 from B1 reflects the strengthening of the company's governance, particularly related to the management of its large investment portfolio, which is held abroad by its UK subsidiary Uzbekinvest International Insurance Company (UIIC) and accounted for 43% of the total consolidated assets or around 60% of its total equity at the end 2018.

Since the beginning of 2019, UIIC's securities portfolio has been transferred and managed by Credit Suisse AG (A1 positive, baa2). The portfolio was transferred from Swiss Falcon Private Bank Ltd (unrated), which in previous years was scrutinized by regulators from different countries, rising Moody's concerns about the management and adequate oversight over this investment portfolio. Following this transfer, Moody's does not have any particular governance concerns for Uzbekinvest as the company addressed the shortcomings it faced in previous years, Moody's reports.

Uzbekinvest's LC IFSR Ba3 is one notch above the Government of Uzbekistan sovereign rating (B1 stable) given that over 40% of its assets reside outside of Uzbekistan and are invested in high quality US denominated fixed income securities rated Aa-Aaa. At the same time, the IFSR Ba3 remains underpinned by the group's strong position in domestic insurance and its strong capitalization in relation to insurance risks, as reflected in its shareholders' equity as a percentage of total assets, which remains above 70% on a sustained basis. These strengths are offset by the group's concentration in a single and relatively small economy.

The B1 FC IFSR is constrained by the country ceiling for FC bonds

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