Uzbekistan launches national reinsurer in strategic move to strengthen insurance market: S&P

Uzbekistan is preparing to launch its first national reinsurance company, the Reinsurance Company of Uzbekistan (RCU), in a move that international credit rating agency S&P Global Ratings describes as strategically important but highly dependent on strong capitalisation and effective execution.

The initiative, intended to increase local risk retention and improve the development of the country’s insurance, reinsurance, and capital markets, will come into effect on September 1, 2025.

According to S&P Global Ratings, domestic insurers will be required to offer reinsurance placements to the RCU before seeking coverage from foreign markets.

This “first offer” mechanism is expected to help reduce the outflow of insurance premiums, lower domestic intermediation and commission costs, and foster greater financial self-reliance. The RCU will begin operations with authorised capital of 300 billion Uzbekistani som (approximately $23 million), equally funded by the government and private investors.

S&P Global Ratings notes that while the RCU represents a step forward in building local reinsurance capacity, it is unlikely to replace international reinsurers in the short term.

The agency expects the RCU to initially concentrate on developing technical capabilities, improving data systems, and supporting smaller and mid-sized insurers that often face difficulties accessing global reinsurance markets. Over time, the company could play a central role in addressing insurance gaps in sectors such as agriculture, infrastructure, and climate risk.

However, S&P Global Ratings highlights that the initiative introduces several risks. These include potential inefficiencies in pricing, limited operational independence, and governance concerns—especially if strong oversight and actuarial discipline are not maintained.

While centralising reinsurance could improve retention and market structure, it may also disrupt competitive dynamics if not carefully managed. The agency emphasises that sound governance and transparency will be essential for the RCU to achieve its goals without compromising market stability.

The RCU’s development will also require major adjustments from both insurers and regulators. S&P Global Ratings points out that domestic insurers will need to revise their treaty negotiation procedures and internal workflows, while the RCU must establish effective pricing methods, retrocession strategies, and claims management systems from the ground up. These early-stage operational demands present a significant execution challenge and are likely to extend into the first half of 2026.

From a regulatory standpoint, S&P Global Ratings expects the emergence of the RCU to necessitate enhanced solvency oversight, more advanced capital adequacy requirements, and the introduction of risk aggregation tools to mitigate concentration risks.

A gradual transition toward internationally recognised, risk-based capital models could further support the evolution of Uzbekistan’s insurance market.

Despite the structural ambition behind the RCU, S&P Global Ratings considers its immediate impact on insurance ratings to be neutral, due largely to the company’s limited capital base and lack of operational history.

However, if the RCU successfully builds technical capacity, strengthens domestic insurers’ risk management frameworks, and supports broader insurance penetration, it could improve the sector’s long-term resilience. The agency also cautions that any shortcomings in governance or transparency could negatively affect investor confidence and stall progress across Uzbekistan’s financial sector.

S&P Global Ratings ultimately views the RCU as a policy-led effort with the potential to reshape the country’s insurance landscape—provided it meets the operational, regulatory, and market credibility standards necessary for sustained success.

Its integration into global reinsurance networks, coupled with a demonstrated commitment to sound risk management and financial reporting, will be critical in determining whether the RCU becomes a meaningful force in both the domestic and international insurance arenas.