Press Release

JCR-VIS Reaffirms IFS Rating of Chubb Insurance Pakistan Limited
 

Karachi, December 30, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Insurer Financial Strength rating of Chubb Insurance Pakistan Limited (CIL) at ‘AA’ (Double A). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on 1st December, 2015.

During January 2016, The Chubb Corporation was acquired by ACE Limited which led to a global insurance entity operating under the ‘Chubb’ brand name. Subsequent to the acquisition, ACE insurance limited, Pakistan amended its name to Chubb Insurance Pakistan Limited.

The assigned rating of CIL derives strength from the Chubb Group. CIL is a wholly owned subsidiary of Chubb INA International Holdings, Ltd. Delaware, USA, which is part of Chubb Group. Chubb is the world’s largest publicly traded property and casualty insurer, with operations in 54 countries. Financial strength of the parent entity is strong as reflected in its Financial Strength Rating of ‘AA’ by an international rating agency. As of September 30, 2016, Chubb had total assets of $161.8b while equity base stood at $61.8b.

The rating incorporates CIL’s strong risk adjusted capitalization level as evident from treaty protection and conservative investment profile. Support from the parent entity is evident in the form of equity injection and sizeable treaty capacities, largest in the domestic context, providing CIL significant advantage in terms of business generation while allowing the company to prudently manage risk.

Underwriting performance of the company has been impacted during 2015 and in the ongoing year due to lower business volumes resulting in higher cession and increase in treaty cost due to prior period adjustments. Decline in business volumes is primarily on account of international rating requirement by lenders. Resultantly, the company incurred a loss in 2015 and lower profits in 9M16 vis-a-vis preceding periods. Moreover, cash flow from operations was negative during 9M16. Sponsors have also injected Rs. 100m in the ongoing year in order to ensure compliance with regulatory requirement. Going forward, reinsurance arrangement has been rationalized to reduce volatility in earnings; impact of the same will be tracked by JCR-VIS.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. Javed Callea (Ext: 201) at (021) 35311861-70 (10 lines) or fax to (021) 35311873.


Jamal Abbas Zaidi
Advisor

Applicable rating criterion: Methodology - General Insurance (September 2016)

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Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2016 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited