A.M. Best Affirms Ratings of Jubilee General Insurance Company Limited

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Jubilee General Insurance Company Limited (Jubilee) (Pakistan). The outlook for both ratings remains stable.

The ratings reflect Jubilee’s solid risk-adjusted capitalisation, track record of good operating performance and well-established business profile in Pakistan. An offsetting rating factor is the high level of economic and political risk associated with Pakistan.

Jubilee’s risk-adjusted capitalisation strengthened during 2014 with capital and surplus rising by 13.9% to PKR 5.4 billion (USD 54.1 million), following strong internal capital generation. Jubilee’s capital position benefits from material unrealised capital gains emanating from its equity and real estate portfolios, with the fair value of certain assets significantly higher than the reported statement values. Jubilee’s risk-adjusted capitalisation is expected to remain solid and sufficient to absorb its projected underwriting growth over the next three years. The company purchases catastrophe excess of loss reinsurance protection based on realistic disaster scenarios provided by its lead reinsurer and broker; however, catastrophe modelling in Pakistan remains undeveloped and subject to uncertainty. As a result, Jubilee’s capital position is exposed to volatility in the event of a severe earthquake in Karachi, which exceeds the loss protection purchased by the company.

Jubilee has a track record of good operating performance, with consistently increasing pre-tax profits reported over the past five years (2010-2014). The company reported a solid pre-tax profit of PKR 1.3 billion (USD 12.7 million) in 2014, equating to a return on equity of 21.3%. Earnings continue to be driven predominantly by investment operations, with the technical result continuing to account for less than a quarter of the overall pre-tax result. Despite this, underwriting performance remains strong as evidenced by a five-year average combined ratio of 93.7% (2010-2014).

Jubilee maintains a well-established business profile in Pakistan, ranked as the third largest domestic company by 2014 gross written premiums. The company underwrites solely non-life business originating in Pakistan, with a well-diversified portfolio by line of business. The company’s premium base reached approximately PKR 7.0 billion (USD 69.5 million) in 2014. Jubilee has developed innovative new products and strengthened its distribution partnerships in the country, which are expected to enable the company to successfully grow its underwriting operations faster than the market average.

A change in A.M. Best’s assessment of the economic or political situation in Pakistan or the company’s ability to navigate the challenging operating environment may result in positive or negative rating actions. In addition, negative rating pressure may arise from a notable deterioration in Jubilee’s risk-adjusted capitalisation and/or its operating performance.

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.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150710005462/en/

A.M. Best Company, Inc.
Myles Gould, +(44) 20 7397 0267
Financial Analyst
[email protected]
or
Mahesh Mistry, +(44) 20 7397 0325
Director, Analytics
[email protected]
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company, Inc.

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