Fitch Ratings has upgraded the Insurer Financial Strength (IFS) rating of KAFOLAT Insurance Company, one of Uzbekistan’s leading non-life insurance companies, to “BB-” from “B+” with a stable outlook.
The upgrade reflects KAFOLAT’s strengthening financial profile and improved capital position, as well as improved geographical diversification, which benefits from inflows in reinsurance business, particularly after the company reduces its U.S. exposure in 2024 and 2025.
The rating upgrade also takes into account the company’s prudent risk management practices and continued focus on sustainable business growth.
A conservative investment strategy, good but volatile financial performance, enhanced reserving practices and improvements in natural disaster risk models were also factors that influenced the rating upgrade.
“The positive outlook reflects the potential for further improvement in the company profile and investment and asset risk assessments, particularly if the industry profile and operating environment (IPOE) scope and sovereign rating are upgraded, both of which are currently on a positive outlook,” Fitch Ratings said.
Discussing the key drivers of the rating upgrade, Fitch said KAFOLAT maintains a strong domestic footprint in property, liability, auto, health and life insurance.
Additionally, as noted above, increased inflows into reinsurance and reduced U.S. exposure have significantly expanded the geographic distribution of insurers.
KAFOLAT’s capital strengthens to a ‘Strong’ Prism Score in 2025 (up from ‘Adequate’ in 2024 and ‘Weak’ in 2023), supported by lower net/gross leverage (2.8x/5.8x), a regulatory solvency ratio of 195% at end-Q1 2026, and sufficient capital to meet Uzbekistan’s growing requirements.
Fitch also noted that while the insurer’s financial performance remains good by local standards, earnings remain volatile. ROE falls to 14% in 2025 from 64% in 2024 due to foreign exchange losses, underwriting fluctuations and IFRS 17 costs. Underwriting remains good, with a combined ratio of 74%.
KAFOLAT’s investments focus on cash and deposits of domestic banks with ratings close to those of the sovereign. At the end of 2025, risk assets accounted for 2.6% of capital. Asset quality is constrained by the narrow domestic market and exposure to unrated mid-sized banks.
The company is one of the few insurance companies in the market that prepares best-estimate valuations of non-life insurance reserves. KAFOLAT evaluates non-life insurance reserves using best estimate valuations and IFRS 17 standards. Both internal calculations and IFRS 17 calculations indicate that slack provisions exist under local accounting regulations.
Fitch also highlighted KAFOLAT’s reliance on reinsurance as one of the key drivers of the rating upgrade. The insurer’s more than $1.3 trillion UZ property and construction risks are protected by highly rated European treaty reinsurance, with an ‘A’-rated international temporary reinsurance increase through 2026. However, the heavy use of low-credit domestic reinsurers creates counterparty risk.
Finally, Kafolat is one of the few insurance companies in the region that prepares maximum possible loss estimates and actively manages catastrophe risks.
The company’s 2025 catastrophe risk model reflects a comprehensive assessment of potential losses from natural catastrophe risks such as earthquakes, storms and floods. Based on this analysis, Fitch estimates that net losses from a 1-in-250-year catastrophic event would erode approximately 30% of the company’s capital by the end of 2025.
The company noted that for KAFOLAT, this rating upgrade represents an important milestone in the company’s strategic development and consolidates its position as one of the leading insurance companies in Uzbekistan.
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 to strengthen financial stability, strengthen governance and provide reliable insurance solutions to our clients. We sincerely appreciate Fitch Ratings’ professional assessment and express our gratitude to our clients, 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.
