Press Release
VIS Reaffirms IFS Rating of Chubb Insurance Pakistan Limited
Karachi, December 24, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength rating of Chubb Insurance Pakistan Limited (‘CIPL’ or ‘the Company’) at ‘AA’ (Double A). The rating signifies very high capacity to meet policyholder and contract obligations. Risk is considered modest but may vary slightly over time due to business /economic conditions. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 31, 2018.
Chubb Insurance Pakistan Limited (‘CIPL’ or the Company) operates as a wholly owned subsidiary of Chubb INA International Holdings Limited (U.S.A). The Company follows a very selective underwriting strategy. CIPL’s primary competitive advantage is the sizable treaty capacities arranged with associate Group company; as the counterparty, in this case is highly rated on the international scale, which allows CIPL to underwrite complex and specialized risks across the property line.
Ratings assigned to Chubb are underpinned by the strong sponsor profile i.e. The Chubb Group, one of the world’s largest multiline Property and Casualty insurers with operations in 54 countries. The rating further incorporates reinsurance arrangements with Chubb Tempest Reinsurance Ltd., Bermuda (CTRL), belonging to the Chubb Group as well. In addition, the assigned rating also factors in the underwriting performance and leveraging, which compare favorably to peer median.
In 2018, business volumes for the company declined by 17.2%, mainly due to a decrease in business in the Fire and Property (F&P) segment. So far, gross premium underwritten in 9M’FY19 is 40% higher than SPLY. The management has envisaged to maintain this growth for full year. Profitability metrics and leverage have slightly weakened, albeit remaining in line with peers. Liquidity profile derives comfort from the liquid assets to liabilities ratio of more than 1x. Conversely, we have noted an uptick in insurance debt; albeit the management attributes this to growth in premium receivable within agreed contractual terms. The aging profile of the insurance debt is considered sound.
The outlook for 2020 derives impetus from the expected addition of CPEC-led power projects and potential construction of mega-infrastructure projects such as dams. The assigned ratings remain dependent on maintenance of leverage and profitability metrics, in line with peers.
For further information on this rating announcement, please contact Mr. Arsal Ayub (Ext: 214) or the undersigned (Ext: 201) at 35311861-66 or email at info@vis.com.pk.
Javed Callea
Advisor
Applicable rating criterion: Methodology - General Insurance (March 2017)
http://vis.com.pk/docs/Meth-GenInsurance201702.pdf