Press Release

JCR-VIS Upgrades IFS Rating of Jubilee General Insurance Company Limited to AA+

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Karachi, December 28, 2012: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has upgraded the Insurer Financial Strength (IFS) Rating of Jubilee General Insurance Company Limited (Jubilee) to ‘AA+’ (Double A Plus) from ‘AA’ (Double A). Outlook on the assigned rating is ‘Stable’.

Rating takes into account robust financial strength of Jubilee as demonstrated by its strong capitalization and liquidity indicators. Healthy profitability trends and sound dividend payout policy have facilitated the company in improving its equity base in line with growth in underwriting operations; thus, maintaining leverage indicators within prudent limits. Given the sizeable equity reserves of the institution, capacity to absorb losses falling within priority limits, is considered sound. Moreover, downside risk emanating from the current investment portfolio mix on account of market or credit risk is considered manageable in relation to equity base of the company. Liquidity profile of the institution also depicts strength, with liquid assets providing coverage of more than 100% against outstanding liabilities.

Market share of Jubilee has enhanced over time and the company has maintained its position as the third largest general insurance company in the private sector. Strong growth has been witnessed in the company’s gross premium base on a year on year basis and compares favorably to the industry growth rate. Overall results from underwriting operations for the year 2011 and the on-going year have remained positive. However, products of FIs and Engineering continue to be loss making segments for the institution. Underwriting guidelines for certain business segments have been revised in view of past claims experience; impact of these changes will be meaningfully tested over time. Future trends in underwriting performance will continue to be tracked by JCR-VIS.

Investment income lends strong support to overall operations of the company with operating ratio averaging around 85% in the past three years. With decline in policy rate, there may be some pressure on the yield of the investment portfolio with income and money market funds comprising two-thirds of the portfolio. Higher allocation to equities is on the anvil, if favorable expectations regarding the stock market persist; though the exposure is not expected to exceed 30% of the investment portfolio.

Major sponsors of the company comprise reputed institutions with sizeable shareholding of Aga Khan Development Network. Senior management team has remained stable and comprises seasoned professionals. Overall governance infrastructure at the organization is considered sound. Efforts to further improve control environment and operational efficiency are on-going at the institution. Upgrade of IT system is in process and is envisaged to be completed by next year.

For further information on this rating announcement, please contact Mr. Abdur Rahim, ACII (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-71 (10 lines) or fax to 35311873.

Jamal Abbas Zaidi
Deputy CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited 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.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.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 2012 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited