Press Release

VIS Upgrades IFS Rating of Century Insurance Company Limited
 

Karachi, December 31, 2019: VIS Credit Rating Company Limited upgraded the Insurer Financial Strength (IFS) rating of Century Insurance Company Limited (CICL) from ‘A+’ (Single A Plus) to ‘AA-’ (Double A Minus). The IFS rating of ‘AA-’ signifies very high capacity to meet policyholder and contractual obligations. Risk is modest, but may vary slightly over time due to business/economic conditions. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 28, 2018.

The rating incorporates the sound capitalization and liquidity indicators of the company. Given the sizeable equity base, loss absorption capacity of the institution is considered sound. Leverage indicators remained well within prudent limits and indicate further room for growth. Liquidity profile also depicts strength, with liquid assets providing sound coverage against adjusted liabilities. Per party risk retained on net account for different segments is low in relation to equity base of the company.

Gross premium of the company amounted to Rs. 1.2b (FY17: Rs. 1.0b) in 2018, depicting a growth of 18.3% similar to the industry’s growth rate. During 9M19, CICL underwrote business amounting to Rs. 1.0b; growth in business volumes are expected to remain at similar levels in the coming year given the prevailing dynamics of the economy. Claims management of the company has remained sound, during the outgoing year, with loss ratios remaining at similar levels. With an improved expense ratio, underwriting results of the company improved significantly during FY18. Going forward, achieving growth in market share while maintaining underwriting quality would be an important rating driver.

Historically, overall profitability of the company has been primarily driven by investment income. Investment portfolio of the company features a significant proportion of equities followed by debt securities. In the back drop of interest rate scenario and downward trajectory in the stock market, support from investments reduced during 2018. However, the company has revisited its investment portfolio, during the last quarter of 2019, to reduce downside risk. Maintaining profitability metrics will remain a key rating driver. Insurance debt in relation to gross premium continues to remain on the higher side in comparison to peers; aging of receivables is considered satisfactory.

For further information on this rating announcement, please contact Mr. Atiq Anwar Mahmudi (Ext: 208) or Ms. Muniba Abdullah, CFA (Ext: 215) at 021- 35311861-66 or email at info@vis.com.pk.


Javed Callea
Advisor

Applicable rating criterion: Methodology: General Insurance (November, 2019)
http://vis.com.pk/kc-meth.aspx

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