Fitch Ratings has upgraded the Insurer Financial Strength (IFS) Rating of KAFOLAT Insurance Company, one of the leading non-life insurers in Uzbekistan, to ‘BB-‘ from ‘B+’, with a Stable Outlook.
The rating upgrade reflects KAFOLAT’s strengthened financial profile and better capital position, as well as improved geographical diversification, with the latter benefiting from exposure to inward reinsurance – particularly following the company’s reduction in US risk exposure in 2024 and 2025.
The rating upgrade also considers the company’s prudent risk management practices and continued focus on sustainable business growth.
A conservative investment strategy, good but volatile financial performance, enhancements in reserving practices and improvements in natural catastrophe risk modelling are factors that also influenced the rating upgrade.
“The Positive Outlook reflects the potential for further improvement in the company profile and in investment and asset risk assessments, particularly if the industry profile and operating environment (IPOE) range and sovereign rating are upgraded, both of which are currently on Positive Outlook,” Fitch Ratings stated.
When discussing the key drivers for the rating upgrade, Fitch stated that KAFOLAT maintains a robust domestic footprint across property, liability, motor, health, and life insurance.
Additionally, as noted above, increased inward reinsurance and reduced US risk exposure have significantly broadened the insurer’s geographic spread.
KAFOLAT’s capital strengthened in 2025 to a ‘Strong’ Prism score (up from ‘Adequate’ in 2024 and ‘Somewhat Weak’ in 2023), backed by a low net/gross leverage (2.8x/5.8x), a 195% regulatory solvency ratio at end-1Q26, and sufficient capital to meet Uzbekistan’s rising requirements.
Fitch also noted that while the insurer’s financial performance remains good by local standards, earnings remain volatile. 2025 ROE dropped to 14% from 64% in 2024 due to FX losses, underwriting volatility, and IFRS 17 costs. Underwriting remains good, with a 74% combined ratio.
KAFOLAT’s investments focus on cash and deposits in domestic banks rated near the sovereign. Risky assets were 2.6% of capital at end-2025. Asset quality is constrained by a narrow domestic market and exposure to an unrated mid-tier bank.
The company is among a limited number of insurers in its market to prepare a best-estimate valuation of non-life insurance reserves. KAFOLAT evaluates non-life reserves using best-estimate valuations and IFRS 17 standards. Both internal and IFRS 17 calculations indicate redundant reserves under local accounting regulations.
Fitch also highlighted KAFOLAT’s reliance on reinsurance as part of the key drivers for the rating upgrade. The insurer’s property and construction risks above UZS1,300 billion are protected by highly rated European treaty reinsurers, and ‘A’ rated international facultative reinsurance increased in 2026. However, significant use of low-credit domestic reinsurers introduces counterparty risk.
Finally, Kafolat is one of the few insurers in the region that prepares probable maximum loss estimates and actively manages catastrophe risk exposure.
The company’s 2025 catastrophe risk modelling reflects a comprehensive assessment of potential losses from natural catastrophe perils, including earthquakes, storms and floods. Based on this analysis, Fitch estimates that a net loss from a one-in-250-year catastrophe event would erode about 30% of the company’s capital at end-2025.
For KAFOLAT, this rating upgrade represents an important milestone in the company’s strategic development and reinforces its position as one of Uzbekistan’s leading insurance companies, the firm noted.
Jasur Jorabaev, Member of the Supervisory Board of KAFOLAT Insurance Company, said: “This rating upgrade is an important recognition of the hard work and dedication of our employees, management, shareholders, and business partners.
“It reflects our long-term strategy of strengthening financial stability, enhancing governance, and delivering reliable insurance solutions to our clients. We sincerely thank Fitch Ratings for its professional assessment and express our gratitude to our customers, brokers, reinsurers, and partners for their continued trust and support.”
The upgraded rating is expected to further strengthen KAFOLAT’s relationships with international brokers, reinsurers, and institutional partners while supporting the company’s continued expansion in regional and international insurance and reinsurance markets.
