Jubilee General Insurance has a track record of strong operating performance, with a five-year weighted average return on equity of 16.5% (2015-2019), notes AM Best.
Over the same period, the company delivered a robust weighted average combined ratio of 91.6%, demonstrative of good underwriting discipline. Despite strong technical results, the company’s balance of earnings continues to be heavily weighted toward investment income.
Jubilee’s operating earnings have remained broadly stable in recent years, with the company achieving profit before tax of PKR1.7bn ($11.2m) in 2019, compared with PKR1.6bn in 2018.
AM Best has affirmed Jubilee’s Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-”. The outlook of these credit ratings is stable.
Balance sheet strength
The ratings reflect Jubilee’s balance sheet strength, which AM Best categorises as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Jubilee’s balance sheet strength is underpinned by very strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio. AM Best expects prospective risk-adjusted capitalisation to remain at least at a very strong level over the medium term, supported by continued robust internal capital generation.
The balance sheet strength further benefits from good levels of liquidity to support operations. Offsetting factors to the balance sheet strength assessment include the concentration of the company’s investments in Pakistan, in particular, elevated exposure to domestic equities, which exposes the balance sheet to potential volatility. Furthermore, mandatory cessions in Pakistan leave the company exposed to credit risk arising from the non-rated state-owned reinsurer.
As Pakistan’s third largest non-life insurer, Jubilee maintains a good competitive position in its domestic market. The company writes a diversified portfolio, offering conventional and takaful products, principally to commercial customers. Jubilee continues to seek additional market share through developing its retail operations, which are expected to benefit from the company’s innovation initiatives and development of online platforms. Jubilee’s online distribution capabilities have proved a competitive advantage in the backdrop of challenging conditions faced in 2020.