In 3Q17, in response to the weaker economic environment, AzInsurance decided to launch a new business plan, Fitch Ratings reported.
According to the agency, the company intends now to optimise its business processes through digitalisation, reduce its cost base and diversify its insurance product mix through product innovation. However, Fitch views this business strategy as challenging to implement successfully. In Fitch's view, AzInsurance faces challenges in finding a stable market position and implementing the strategic steps that could make the company more resilient to the operating environment.
Historically, AzInsurance's shareholder repatriated nearly 100% of its net profits in the form of dividends. However, in 2016-9M17, AzInsurance paid out 22% and 48% of prior year net profit. Fitch understands from management that AzInsurance's shareholder has decided to reduce the sum of expected dividends to maintain the company's sound capitalisation. This decision should support the company throughout the restructuring of its business.
In 9M17 AzInsurance reported a net loss of AZN4.8 million.