JCR-VIS reaffirms Insurer Financial Strength rating of Jubilee Insurance

KARACHI: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Insurer Financial Strength (IFS) Rating of Jubilee General Insurance Company Limited (Jubilee), formerly New Jubilee Insurance Company Limited at ‘AA’ (Double A). The rating denotes very high capacity to meet policyholder and contract obligations. However, risk is modest, but may vary slightly over time due to business, economic conditions. Outlook on the assigned rating remains ‘Positive.’

Rating derives strength from the strong competitive position of Jubilee in the private insurance industry, having a market share of 13.7 percent in gross premium at end-June 2011. Rebranding exercise was undertaken by the company in 2011 to align itself with other insurance companies established under the brand name of ‘Jubilee’ in Pakistan and Africa, also sponsored by Aga Khan Development Network, Jubilee’s key sponsor.

Underwriting results of the company registered improvement in 9M2011, in line with industry trends. Overall net claims ratio of the company witnessed a reduction, particularly in Product of Financial Institutions and Accident and Health. While underwriting has become more selective in the engineering segment, its translation into meaningful improvement in net claims ratio of the segment remains to be seen. Even with inflationary trends in the economy, overall expense ratio of the company has been maintained within prudent limits.

Liquidity profile of the institution is strong, supported by predominance of low-risk exposures in investment portfolio. Investment income has thus also depicted stability. For continuity of sound investment management practices, greater delegation of authority to management is warranted, following a resource-building exercise.

Capitalisation indicators of the company are considered sound. Reinsurance coverage is provided by highly rated reinsurers. The company primarily has non-proportional treaty arrangements for the larger business lines with low loss retention levels vis-à-vis capital base of the company.

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