Press Release

JCR-VIS Reaffirms IFS Rating of Century Insurance Company Limited

Karachi, December 28, 2018: JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) rating of Century Insurance Company Limited (CICL) at ‘A+’ (Single A Plus). Outlook on the assigned rating is ‘Stable’. The IFS rating of ‘A+’ signifies high capacity to meet policyholder and contract obligations; risk factors may vary over time due to business/economic conditions. Previous rating action was announced on November 15, 2017.

The assigned rating takes into consideration the sponsor profile, stable and professional management team and strong risk-adjusted capitalization level as evident from solid treaty protection and sound liquidity indicators. The rating also factors in prudent underwriting criteria, well-developed risk management infrastructure and solid reinsurance program placed with Scor Reinsurance Company. However, the rating is constrained by low market share in terms of gross premium and sizeable exposure to market risk given that two-third of investments are in equities which may result in limited support to profitability of the company. Going forward, achieving growth in market share while maintaining underwriting quality would be an important rating driver.

After subdued business growth over the last three years, CICL reported increase of 10% in gross premium over 9M2018 vis-à-vis same period last year. Window Takaful segment commenced operations in August 2017 and posted gross contribution of Rs. 5.4m during remaining months of 2017 and Rs. 44.1m in 9M2018. In line with diversified portfolio mix, growth was manifested in all segments. While in 2016, health portfolio decreased on account of cautious approach adopted by management; the same increased in subsequent years as the company resumed underwriting with continued caution. Over the years, related party business has remained above 35% of total premium underwritten while gross claims pertaining to related parties depicted slight increase. CICL plans to expand product range and enhance distribution channels to increase penetration in retail, micro-insurance and commercial segments.

Insurance debt in relation to gross premium has witnessed growth; given the new regulations related to unpaid premium and ongoing collection efforts, receivables are projected to be reduced. Liquidity profile draws comfort from sizeable liquid assets carried on balance sheet. Capitalization levels are healthy and indicative of room for future growth.

For further information on this rating announcement, please contact the undersigned (Ext: 207) at 021-35311861-71 or fax to 021-35311872-3.



Jamal Abbas Zaidi
Advisor

Applicable Rating Criteria: General Insurance (March 2017)
http://jcrvis.com.pk/docs/Meth-GenInsurance201702.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .