Press Release

VIS Reaffirms IFS Rating of Jubilee General Insurance Company Limited

Karachi, December 28, 2021: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of Jubilee General Insurance Company Limited (‘JGI’ or ‘the Company’) at ‘AA+’ (Double A Plus). 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’. The previous rating action was announced on December 29, 2020.

The rating assigned to JGI takes into account JGI’s market positioning as the third largest private sector insurance company in Pakistan. Furthermore, the rating is strengthened by an element of sponsor support, given presence of Aga Khan Foundation for Economic Development, and related entities, as the majority shareholders. JGI’s rating also takes into account JGI’s reinsurance panel, which constitutes counterparties with sound credit quality (as reflected by their IFS ratings) and modest internal retention.

During 2020, JGI’s insurance underwriting posted contraction of 1.6%. Given flat growth being posted by most private insurers in the period, the trend was in line with other market participants. Nevertheless, attrition in market share was posted by most market participants, as a public sector aviation segment policy was underwritten by a single private sector company. With the account envisaged to return to public sector in 2021, market shares are expected to normalize in 2021. VIS will continue to monitor changes in JGI’s market share on an ongoing basis.

In line with management efforts, the business mix depicts a higher tilt towards ‘Fire & Property Damage’ segment, while proportion of ‘Accident & Health’ segment has been reduced on account of profitability concerns. From a profitability perspective, business mix has depicted improvement on a timeline. The combined ratio was affected in 2020, as a result of higher claims ratios, particularly emanating from the ‘Fire & Property Damage’ segment. The claims ratio in 9M’21 has remained contained and management expects the same to be below 60%, which should allow the Company to post healthy underwriting profit in 2021. Investment performance has been noteworthy in 2020, as reflected by net operating ratio, which was superior to preceding year, despite the lower underwriting results.

JGI's capital buffers have improved during the period under review, give improved profitability performance, mainly driven by investment gains. In the absence of any growth both operating and financial leverage remain range bound and on the lower side. Furthermore, investment portfolio is largely liquid providing sizable coverage to net technical reserves. The assigned rating remains dependent on maintenance of the company’s market positioning, and capitalization liquidity indicators in line with the peer median and assigned threshold.

For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext: 216) or the undersigned (Ext: 306) at 35311861-66 or email at info@vis.com.pk.




Faryal Ahmad Faheem
Deputy CEO

VIS Entity Rating Criteria Methodology - General Insurance (November 2019)
http://vis.com.pk/kc-meth.aspx

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .