PACRA Maintains IFS Rating of Jubilee Life Insurance Company Limited

Pakistan's Life Insurance sector faces challenges due to an unexpected rise in inflation leading to a decrease in the disposable incomes. To adapt, sector players shifted their focus from first-year persistency to second-year, prioritizing top-line growth. However, the market size of the Life Insurance sector with respect to the Gross Premiums Written (GPW) posts growth of ~24% in 9MCY23.On the expense side, gross claims grew by ~45%. While the loss ratio, with respect to both the private and public segments, has also been gradually rising. On the financial risk side, the sector is expected to maintain liquidity. Going forward, a sluggish economic pace may impact the sector's overall stability.
The assigned IFS rating of Jubilee Life Insurance Company Limited (“Jubilee Life” or “the Company”) derives strength from its strong association with Agha Khan Fund for Economic Development (AKFED), having sound financial footing across many business arenas. Jubilee Life enjoys strong business acumen of its sponsors which combined with AKFED nominees on the Board, enhances the Company's governance framework. The Company offers a wide range of standard products, both in conventional and takaful market. Individual Life - Unit Linked products remain prominent (~73% of total GPW), followed by accident & health insurance (~20%), and the corporate health segment ~7%. The Company focuses on an agency model with a vast branch network. First-year and renewal persistency of the Company has deteriorated, reporting at ~76% and ~73%, respectively. The current economic conditions have led to an unusual surge in claims, particularly surrenders, stressing the underwriting performance of the Company. However, bottom-line gathers support from strategic investments in debt securities realizing sound investment income. On the financial risk front, the Company's cash outflow from operations underwent a decline, largely attributable to substantial claims payouts and surrenders. However, the rating takes comfort from adequate liquidity and risk appetite.
The rating is dependent on the sustained competitive positioning of the Company within life insurance industry. On an ongoing strategy revamp to ensure an improvement in core and operational profitability is imperative. Moreover, solvency profile as indicated through reserves, must remain strong, at all times, so as to sustain the rating.

About the Entity
Jubilee Life Insurance Company is a public listed Company, incorporated on 29-Jun-95. The majority of the shareholding vests with Agha Khan Development (~57.9%), followed by Habib Bank Limited (~18.5%) and Jubilee General Insurance (~6.4%). Foreign investors and Financial Institutions holds ~6.3% and ~3.6%, respectively. The remaining shareholding (~7.3%) vests with the General Public.
The Company has a nine-member Board, chaired by Mr. Rafiuddin Zakir Mahmood. Mr. Javed Ahmed heads as the Chief Executive Officer of the Company and is supported by an experienced team of professionals.