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Karachi, VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of Jubilee General Insurance Company Limited (JGI) at ‘AA++(IFS)’. This rating indicates JGI’s very strong capacity to meet policyholder and contract obligations, with minimal risk factors. The outlook on the rating is stable, following the previous rating action announced on December 30, 2022.
According to VIS Credit Rating Company Limited, JGI’s rating benefits from its robust sponsorship profile, including the majority shareholding by the Aga Khan Fund for Economic Development and related entities. JGI is recognized as the third-largest private sector insurance company in Pakistan, holding a 13% market share. The rating takes into account the elevated business risk profile of the insurance industry due to factors like the domestic economic slowdown, high interest rates, rupee devaluation, inflation, flood-related destruction, and expected rate hardening by international reinsurers.
Despite these challenges, JGI has experienced notable growth in its top line, primarily driven by the fire and property segment, following upward revisions in sum insured and premium rates due to inflationary pressures. The company’s strategic focus on technological development, evidenced by the rollout of a new digital app, is expected to contribute positively to future growth.
The rating period saw volatility in loss ratios, with an increase in the outgoing year due to a rise in both the quantity and average size of claims. This impacted the combined ratio, despite rationalization of underwriting expenses. However, JGI’s sound reinsurance arrangements with renowned international reinsurers offer a degree of comfort.
JGI’s overall liquidity profile remains satisfactory, as indicated by the coverage of net technical reserves by liquid assets. However, insurance debt to gross premium and financial leverage were recorded higher at the end of the first half of the calendar year 2023. This is consistent with half-year trends, but management expects these indicators to return to normal ranges, a factor considered in the assigned rating.
Going forward, JGI’s ability to maintain its market dominance while navigating the challenging business environment will be crucial for its rating.
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