AM Best has upgraded the Financial Strength Rating to B+ (Good) from B (Fair) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bb+” (Fair) of JSC Insurance Company Aldagi Group (Aldagi) (Georgia). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect Aldagi’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management.

The rating upgrades reflect AM Best’s expectation that Aldagi will demonstrate continued resilience in its balance sheet strength and maintain its risk-adjusted capitalisation comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by prudent capital and underwriting management. Furthermore, the risk of material capital extractions due to Aldagi’s association with its ultimate parent, Georgia Capital PLC, has been substantially reduced as the latter has improved its financial stability.

Aldagi’s assessment also considers its liquid investment portfolio and moderate dependence on reinsurance, with counterparty credit risk reduced through its use of reinsurers high financial strength. Offsetting factors include the company’s onerous dividend policy, which limits its internal capital generation, as well as Aldagi’s exposure to the moderate political and high economic, as well as financial system risks in Georgia.

Aldagi has a track record of strong operating performance and, in 2024, generated a return-on-equity ratio of 30.8% and a net-net non-life combined ratio of 91.1% (both as calculated by AM Best). Underwriting results have benefited from Aldagi’s prudent approach to risk selection and focus on profitability over top-line growth. In 2024, the company reported insurance service results of GEL 47.7 million (approximately USD 17.0 million) (2023: GEL 37.7 million, approximately USD 13.4 million). Aldagi’s net investment returns contribute positively to its operating profitability, but have been somewhat volatile over recent years owing to the high-interest rate environment in Georgia and internationally, as well as movements in the fair value of invested assets.

Aldagi is one of the largest insurance companies in Georgia, with a market share of approximately 17%, based on 2024 combined non-life and life market premiums. The company benefits from its strong brand and multichannel distribution network. Nevertheless, Aldagi’s business profile is constrained by its geographical concentration and the small size of its portfolio by international standards. In 2024, the company reported insurance revenue of GEL 200.9 million (approximately USD 71.1 million). Aldagi’s top line is expected to grow moderately in the medium term as the company develops its facultative reinsurance business domestically and in regional foreign markets.

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