Press Release

VIS Reaffirms IFS Rating of Century Insurance Company Limited

Lahore, December 27, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Century Insurance Company Limited (CICL or ‘the Company’) at ‘AA (IFS)’ (Double A IFS). IFS rating of ‘AA (IFS)’ denotes very strong capacity to meet policy holders and contract obligations. Risk factors are very low, and the impact of any adverse business and economic factors is expected to be very small. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 15, 2022.
The IFS rating assigned to CICL derives strength from strong group strength, Lakson Group of Companies; the same is an industrial conglomerate with a prominent and diverse presence in several industries, including paper and packaging, media, fast moving consumer goods, and financial services. Considerable support is extended by the sponsoring group with total group business constituting 45% of the topline during the outgoing year. On the other hand, the business risk profile of the insurance industry is currently elevated owing to projected slowdown in the domestic economic activity due to high interest rates, rupee devaluation, and heightened inflation levels coupled with expected rate hardening by international reinsures. The rating incorporates positive trajectory of business volumes, improvement in underwriting results on a timeline basis despite higher loss ratio recorded along with sustainable and growing investment income. Slight increase was witnessed in gross written premium during the rating review period on account of inflation adjustments, forex impact and onboarding of few new clients. The overall business mix is considered balanced and well diverse. Further, the business mix is expected to remain unchanged going forward given the current mix provides diversification while exercising cautious underwriting considering the economic slowdown amid global inflation and recessionary trends. Moreover, significant increase in investment income, largely emanating from higher returns on government securities, supported the bottom line. In terms of composition of investment mix, market risk exists as two-thirds of government securities portfolio entails long tenor PIBs falling largely under available for sale or held for trading categories. However, the same is largely rationalized given benchmark rates are expected to reduce going forward.
The rating factors in reinsurance arrangements largely with counterparties having sound credit risk profiles with appropriate risk retention on net account to maintain risk appetite of the Company. In addition, the aging profile of the claim’s payable was satisfactory with no claim due for more than a year at end of the outgoing year. Further, the rating incorporates sound liquidity profile underpinned by growth in liquid assets in relation to net technical reserves coupled with fair aging of receivables. CICL is considered sound from solvency risk point of view as the Company has adequate cushion in terms of admissible assets over its liabilities. On the other hand, the operating leverage scaled up on a timeline in line with enhancement of operations coupled with significant dividend payout policy; the same is slightly on a higher side for the assigned rating. Overall financial risk indicators are aligned with peer median. With no significant uptick expected in business volumes, the leverage indicators are projected to remain at around current levels during the rating horizon. Going forward, maintaining underwriting quality through rationalization of loss ratios, adequate mitigation of market risk and sustenance of momentum in profitability would remain important rating drivers.
For further information on this rating announcement, please contact Ms. Maham Qasim at 042-35723411-13 (Ext: 8010) or the undersigned at 042-35723411-13 (Ext: 8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: General Insurance

VIS Issue/Issuer Rating Scale

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