A.M. Best Assigns Ratings to Jubilee General Insurance Company Limited

LONDON--(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has assigned a financial strength rating of B++ (Good) and issuer credit rating of “bbb” to Jubilee General Insurance Company Limited (Jubilee) (Pakistan). The outlook for both ratings is stable.

The ratings reflect Jubilee’s strong risk-adjusted capitalisation, solid business profile within Pakistan and good track record of operating performance. Offsetting factors are the company’s dependence on its investment performance for maintaining robust profitability and the level of its enterprise risk management (ERM).

Jubilee is an established company in the Pakistan market, ranking third by gross written premiums. Its strong position has enabled it to achieve premiums in excess of PKR 5 billion (USD 58 million) by year-end 2011. Jubilee’s strong focus and expertise on the local market is likely to strengthen its position. The company has taken good initiatives to develop new products and further enhance its partnerships in the country, which is expected to enable Jubilee to successfully grow faster than the market.

Jubilee’s strong risk-adjusted capitalisation is driven by a solid capital base of PKR 3.5 billion (USD 38.9 million) as at December 2011, relative to a low level of investment and credit risks. Prospective capital adequacy is expected to remain strong and sufficient to absorb Jubilee’s projected growth of up to 25% in each of the next two years. Furthermore, Jubilee’s capital position benefits from its prudent dividend policy with a high level of earnings retention.

Jubilee has a track record of good operating performance. Profit after tax reached approximately PKR 800 million (USD 8.9 million) in 2011, 77% higher than in 2010. Technical profits have generally been stable, with the exception of 2010, which were impacted by flood losses. Thereby, technical performance amounted to PKR 153.7 million (USD 1.7 million) in 2011, showing a considerable improvement compared to 2010 (PKR 64 million [USD 745,000]). The biggest share of profits originates from the company’s investment income, which in 2011, totalled PKR 748.3 million (USD 8.3 million) against PKR 587 million (USD 6.8 million) a year before, highlighting its dependence on this source of income.

In A.M. Best’s view, Jubilee has developed good procedures in assessing, measuring and mitigating the key risks associated with the company. Jubilee continues to develop its risk framework, which is currently in line with its regional peers.

An improvement in the company’s ERM, and sustainable operating performance would add positive pressure on the ratings.

A substantial deterioration in operating performance or risk-adjusted capitalisation could add negative pressures to the ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Assessing Country Risk”; and “Understanding Universal BCAR”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company.Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best
Helio Correa, +(44) 20 7397 0311
Associate Financial Analyst
helio.correa@ambest.com
or
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Mahesh Mistry, +(44) 20 7397 0325
Associate Director
mahesh.mistry@ambest.com
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Europe – Rating Services Limited