LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Jubilee General Insurance Company Limited (Jubilee) (Pakistan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Jubilee’s balance sheet strength, which AM Best categorises as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Jubilee’s balance sheet strength is underpinned by very strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), and supported by good internal capital generation. An offsetting factor to the balance sheet strength assessment is the concentration of the company’s investments in Pakistan, in particular equities, which introduces potential volatility to the balance sheet. Adverse fair value movements led to a decrease in the company’s shareholders’ equity by 4.9% to PKR 7.9 billion (USD 57 million) at year-end 2018, and a further reduction of 4.1% to PKR 7.6 billion (USD 49 million) at the end of September 2019. Furthermore, mandatory cessions leave the company exposed to the non-rated state reinsurer. AM Best expects prospective risk-adjusted capitalisation to remain at a very strong level over the medium term, supported by continued good internal capital generation.
Jubilee has a track record of strong operating performance, with a five-year average return on equity of 16.9% (2014-2018). Over the same period, the company delivered a robust average combined ratio of 93.3%, demonstrative of good underwriting discipline. Despite strong technical results, investment income dominates the company’s operating profits. In 2018, Jubilee achieved profits before tax of PKR 1.6 billion (USD 11.8 million), broadly stable compared to 2017.
As Pakistan’s third-largest non-life insurer, Jubilee maintains a good competitive position in its domestic market. The company writes a diversified portfolio, offering conventional and Takaful products. Jubilee seeks additional market share through developing its retail operations, which are expected to benefit from the company’s innovative online platforms as it adopts a forward-thinking strategy.
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