Karachi, September 23, 2016: JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) Rating of Jubilee Life Insurance Limited (JLI) at ‘AA+’ (Double A Plus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on May 04, 2015.
The life insurance industry premiums, supported by Bancassurance business and unit-linked policies, have posted a CAGR of 23.3% over the last 5 years (FY10-FY15). Given the low life insurance penetration in Pakistan, healthy growth in gross premiums is expected to continue.
The assigned rating incorporates JLI’s very high capacity to meet policyholder liabilities as evident from sound capitalization levels and adequate liquidity profile. Risk profile of the company is also supported by conservative investment profile and concentration in investment-linked policies, where contribution of the company in the claims to be paid declines over time with growth in cash values. Business profile derives strength from favorable persistency levels and healthy growth in business volumes and profitability. JLI has outperformed sector growth rate resulting in an increase in market share.
JLI utilizes three avenues for business generation: Bancassurance (BANCA), Direct Sales Force (DSF) and Group. BANCA remains the primary business driver representing around three-fourth of gross premium during 2015. While productivity compares favourably to peers, JLI has witnessed a decline in the proportion of DSF business. Given the higher persistency and better claims experience of business written through the DSF channel, management is making concerted efforts to improve the proportion of DSF business. Launched in July’2015, takaful operations have shown healthy growth in the ongoing year and have exceeded projections. Momentum of growth within the existing risk profile would be a rating driver, going forward.
Given the growth in unit linked policies, assets under management (AUM) have witnessed significant increase. Over half of the investment comprises exposure to federal government securities while listed equities represent almost one-third of the total investment in mutual funds. Performance of funds under management is a key rating driver and will continue to be tracked by JCR-VIS. While investment management infrastructure is formalized with a functioning board and management investment committee, further strengthening of investment risk management infrastructure, as planned by management, is considered important.
For further information on this rating announcement, please contact the undersigned or Mr. Javed Callea at 021-35311861-70.
Mohammed Khalid Ali
Applicable Rating Criteria: Life Insurance & Family Takaful Rating (Jan 2009)
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