Press Release

VIS Reaffirms IFS Rating of Century Insurance Company Limited

Karachi, December 31, 2020: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) rating of Century Insurance Company Limited (CICL) at ‘AA-’ (Double A Minus). The IFS rating of ‘AA-’ signifies very high capacity to meet policyholder and contractual obligations. Risk is 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, 2019.

The rating assigned to CICL derives impetus from adequate capital buffers, as evident from its operating leverage, which is comfortably low. In view of the same, CICL’s loss absorption capacity is considered sound. Liquidity profile also depicts strength, with liquid assets providing sound coverage against adjusted liabilities. The rating also incorporates CICL’s reinsurance panel, which includes sound counterparties, as reflected by minimum counterpart rating of ‘A-’. Per party risk retained on net account for different segments is low in relation to equity base of the company.

In 2019, growth in the company’s gross premiums/ contribution remained in line with the industry as a result of which consolidated market share (conventional & takaful) has remained stable at 1.4% (includes IAP members only). Underwriting performance remained in line with the historical track record, albeit an increase in gross claims ratio has been noted in 9M20. Nevertheless, the impact on net account was limited. The combined ratio for the company remained stable in 2019, and has dropped in 9M’20; at present level, the combined ratio stands on the lower side.

Profitability has depicted improvement on a timeline, with pre-tax profits being almost 2x for 2019 vis-à-vis 2018. Similarly, pre-tax profit for 9M’20 was already in excess of 2019 full year pre-tax profit. The recovery in profitability is in line with the improvement in equity market performance, as a result of which investment income has depicted a notable uptick. Profit on bank accounts, also depicted improvement on the back of higher interest rates prevalent during the period.

The assigned rating is dependent on maintenance of capitalization & liquidity buffers, reinsurance panel credit quality and profitability is in line with the peers. For further information on this rating announcement, please contact Mr. Atiq Anwar Mahmudi (Ext: 208) or Mr. Arsal Ayub, CFA (Ext: 216) at 021- 35311861-66 or email at info@vis.com.pk .



Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Methodology: General Insurance (November, 2019)
http://vis.com.pk/kc-meth.aspx

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